The ASX 200 tech sector is on its way out of a crushing 48% rout that occurred between 29 August and 30 March.
Since then, the S&P/ASX 200 Information Technology Index (ASX: XIJ) has recovered by 12%.
By comparison, the benchmark S&P/ASX 200 Index (ASX: XJO) has risen 2.1% over the same period.
Let’s look back and see what happened to the share prices of the top 10 ASX tech shares during the downturn.
Then, let’s compare that data to the performance of BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC).
Given the popularity of exchange-traded funds (ETFs) these days, I’m curious as to whether the only ASX tech ETF tracking Australian technology shares alone provided any protection against the sector downturn.
One of the appeals of ETFs is that they represent a basket of stocks. This can reduce the impact of a large price drop in a single stock.
But what if a whole sector falls? Does the structure of ASX ETFs provide any protection for investors?
Let’s conduct a litmus test.
Top 10 ASX tech shares
As stated earlier, the S&P/ASX 200 Information Technology Index fell 48% between 29 August and 30 March, and has rebounded 12% since.
Let’s compare that to the share price falls and recoveries of the top 10 tech shares on the market.
| Sector rank | ASX tech share | Share price change during rout | Share price change since 31 March |
| 1 | Xero Ltd (ASX: XRO) | -57% | +5% |
| 2 | WiseTech Global Ltd (ASX: WTC) | -64% | +0% |
| 3 | NextDC Limited (ASX: NXT) | -32% | +33% |
| 4 | TechnologyOne Ltd (ASX: TNE) | -34% | +4% |
| 5 | Codan Ltd (ASX: CDA) | +3% | +26% |
| 6 | Life360 Inc (ASX: 360) | -61% | +1% |
| 7 | Macquarie Technology Group Ltd (ASX: MAQ) | -2% | +29% |
| 8 | Megaport Ltd (ASX: MP1) | -57% | 79% |
| 9 | Dicker Data Ltd (ASX: DDR) | -8% | +7% |
| 10 | Elsight Ltd (ASX: ELS) | +242% | +4% |
How did ATEC ETF do?
The ATEC ETF fell 42% between 29 August and 30 March compared to the 48% drop for the S&P/ASX 200 Information Technology Index.
Since then, ATEC ETF has recovered 8% compared to a 12% lift for the ASX 200 Info Tech Index.
So, the fall was not as bad with ATEC ETF during the tech rout, but the recovery has not been as fast as the ASX 200 tech sector.
Interesting.
ATEC tracks the S&P/ASX All Technology Index (before fees and expenses).
It’s the only option for investors who want exposure to Australian technology through an ASX ETF.
However, it’s important to know that the S&P/ASX All Technology Index is different to the S&P/ASX 200 Information Technology Index.
The ASX 200 Info Tech Index is comprised of the top 200 tech companies ranked and weighted by market capitalisation.
The All Tech Index is much smaller, comprised of just 45 companies, and only 56% are technically in the tech sector.
The others are from the communications, industrials, healthcare, and financial sectors, but their operations are heavily tech-related.
For example, the largest holding in ATEC is ASX 200 industrials share, Computershare Ltd (ASX: CPU) at 10%.
The fourth biggest holding is Car Group Limited (ASX: CAR), which is a communications sector share, at 8.9%.
The owner of realestate.com.au, REA Group Ltd (ASX: REA), is the sixth biggest holding at 7.5%. REA is also a communications share.
At No. 8 is ASX 200 healthcare share Pro Medicus Ltd (ASX: PME) at 6%.
At No. 9 is another communications share, Seek Ltd (ASX: SEK) at 4.2%.
This diversity of sectors, along with the less volatile nature of ETFs, appears to have provided some protection during the tech sector rout.
The post ASX tech shares vs. ATEC ETF: How they fared during sector downturn appeared first on The Motley Fool Australia.
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More reading
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- 3 reasons I would buy Xero shares following its results
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- Buy, hold, sell: CBA, Life360, and Macquarie shares
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Motley Fool contributor Bronwyn Allen has positions in Betashares S&P Asx Australian Technology ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Life360, Megaport, Technology One, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended Dicker Data, Life360, WiseTech Global, and Xero. The Motley Fool Australia has recommended CAR Group Ltd, Pro Medicus, and Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.