Why this BetaShares ETF could be a strong buy for Aussie investors

Australian technology shares have had a tough time recently.

The BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) remains down around 36% from its 52-week high, which tells us just how much sentiment has shifted.

But for long-term investors, I think that weakness could be an opportunity.

This BetaShares ETF gives investors exposure to a basket of ASX technology shares rather than asking them to pick just one winner. That can be useful in a sector where share prices can move sharply and individual company risks can be high.

What does this BetaShares ETF own?

This ETF is designed to provide exposure to Australian technology shares across software, data centres, digital platforms, cloud technology, and other tech-related industries.

One of the key holdings is Xero Ltd (ASX: XRO).

Xero provides cloud accounting software for small businesses, accountants, and bookkeepers. I like the long-term opportunity because small businesses are becoming more digital, and Xero can help them manage invoicing, payroll, payments, reporting, and cash flow in one place.

Another major holding is NextDC Ltd (ASX: NXT).

NextDC develops and operates data centres. That gives investors exposure to the infrastructure behind cloud computing, artificial intelligence, cybersecurity, and the broader growth in data usage. I think this is an attractive area because the digital economy needs more capacity, not less.

TechnologyOne Ltd (ASX: TNE) is another important name in the portfolio.

It provides enterprise software to customers such as government, education, and large organisations. These customers often need dependable systems for essential operations, which can make revenue sticky. TechnologyOne has also been expanding in the UK, giving it another long-term growth opportunity.

Exposure beyond the obvious names

This BetaShares ETF also gives investors exposure to smaller technology shares that could add useful growth potential.

Codan Ltd (ASX: CDA) is one example. It has exposure to communications, metal detection, and defence-related technology.

SiteMinder Ltd (ASX: SDR) is another. It provides hotel commerce software, helping accommodation providers manage bookings, distribution, and revenue opportunities across digital channels.

Megaport Ltd (ASX: MP1) also brings something different. Its network-as-a-service platform helps businesses connect to cloud providers and data centres more flexibly.

Why I like it after the fall

The 36% decline from the BetaShares S&P/ASX Australian Technology ETF’s 52-week high shows the risk of investing in tech shares.

Higher interest rates, weaker sentiment toward growth stocks, and concerns about valuations can all weigh heavily on this part of the market.

But I think the long-term themes remain attractive.

Businesses are still moving more operations to the cloud. Data demand is still growing. Software is still becoming more important. And Australian companies still need better digital tools to operate efficiently.

This BetaShares ETF gives investors a simple way to access those themes without having to decide whether Xero, NextDC, TechnologyOne, or another holding will be the best performer.

Foolish takeaway

The BetaShares S&P/ASX Australian Technology ETF will not suit every investor.

It is more concentrated and higher risk than a broad Australian share market ETF, and technology shares can remain volatile when interest rates and valuations are in focus.

But after a 36% fall from its 52-week high, I think the risk-reward looks more interesting.

For Aussie investors who want exposure to local technology leaders and emerging growth names, the BetaShares S&P/ASX Australian Technology ETF could be a strong buy for the long term.

The post Why this BetaShares ETF could be a strong buy for Aussie investors appeared first on The Motley Fool Australia.

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• After 7 straight days in the red, where is the value for ASX 200 stocks?

Motley Fool contributor Grace Alvino has positions in Codan. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport, SiteMinder, Technology One, and Xero. The Motley Fool Australia has positions in and has recommended SiteMinder and Xero. The Motley Fool Australia has recommended Technology One. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.