S&P/ASX 200 Index (ASX: XJO) tech shares were smashed over a seven-month period between late August through to 30 March this year.

The downturn led to technology being the second-worst performer of the 11 market sectors in FY26.

The S&P/ASX 200 Information Technology Index (ASX: XIJ) fell 37.22% and delivered total negative returns of 36.97%. 

Tech investors had much on their minds last financial year.  

Firstly, they became worried that high share price valuations and massive artificial intelligence (AI) investment in the US may create an AI bubble. 

Some experts likened the AI boom to the internet boom of the late 1990s. They warned that excessive investor enthusiasm could lead to a dot-com-style correction.

That fear spread throughout the sector quickly, with ASX 200 tech shares peaking in September and entering a bear market just two months later.

A bear market is defined as a 20% (or more) fall from the most recent high point.

There were also fears that AI may decimate software-as-a-service (SaaS) providers after Anthropic released a new legal plug-in for its agentic AI assistant, Claude, in early 2026. 

Within a week, shares in Thomson Reuters, whose SaaS platforms Westlaw and Practical Law serve legal professionals, had lost a fifth of its valuation. 

The SaaS concern hit ASX 200 tech shares hard given four of our six largest companies by market capitalisation are SaaS providers.

Wisetech shares weighed the sector down 

WiseTech Global Ltd (ASX: WTC), which was previously the market’s largest listed tech company, was also a significant drag on the sector in FY26. 

Investors were disappointed with Wisetech’s FY25 earnings, released in August, and governance issues became a big distraction. 

Wisetech went on to become the worst performer of the entire ASX 200 in FY26, dropping 70% in value. 

The company lost its status as the sector’s largest stock by market cap to Xero Ltd (ASX: XRO) in May. 

A strong turnaround for ASX 200 and US tech shares began on 31 March. Since then, ASX 200 tech shares have rebounded by almost 20%. 

Here are the three winners of the tech sector last financial year. 

1. Codan Ltd (ASX: CDA)

Electronics solutions provider Codan delivered the best capital growth among ASX 200 tech shares in FY26.

The Codan share price skyrocketed 119.49% to finish the year at $44.14.

Codan designs and manufactures electronics solutions, including communications equipment and metal detectors, for government, corporate, NGO, and consumer clients worldwide. 

The company reported a 55% increase in net profit after tax (NPAT) to $71.2 million for 1H FY26.

2. Megaport Ltd (ASX: MP1) 

Megaport provides cloud and data centre connectivity services through a global network-as-a-service (NaaS) platform.

The Megaport share price ripped 49.45% to finish FY26 at $21.58. 

In June, Megaport announced it had won four new AI infrastructure contracts worth $458.9 million.

The new work required significant capex, so Megaport ran a fully underwritten $827.3 million entitlement offer at $14.30 per share.

3. Data#3 Ltd (ASX: DTL)

Data#3 is an information and communications technology (ICT) provider. 

The Data#3 share price rose 29.43% to $9.85 on 30 June. 

Data#3 reported a 9% lift in gross sales to $1.54 billion for 1H FY26. Statutory revenue increased 8% to $423 million.

The NPAT was 3.7% higher at $23 million. 

The post ASX 200 tech shares tanked in FY26, but there were 3 winners appeared first on The Motley Fool Australia.

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• Why did Megaport shares smash the ASX 200 in FY26?
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• 7 ASX shares downgraded by brokers this week
• 3 ASX tech stocks tipped to rocket higher in FY27

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Megaport, WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Thomson Reuters. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended Data#3. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The BetaShares Australia 200 ETF (ASX: A200) has grown to be one of the most popular ASX ETFs available here in Australia.

A new report from Betashares has reinforced that the new capital gains tax (CGT) changes may have handed index ETFs like this one an advantage.

What is changing with the Capital Gains Tax?

Currently, if you own shares for more than 12 months in Australia, you generally get a 50% Capital Gains Tax (CGT) discount.

On 12 May 2026, as part of the 2026-27 Federal Budget, the Government announced it would reform negative gearing and capital gains tax (CGT) arrangements.

These changes will apply from 1 July 2027:

• Limit negative gearing for residential property investments to new builds.
• Replace the 50% CGT discount for individuals, trusts and partnerships with cost base indexation and a 30% minimum tax rate on capital gains.

What does this mean for investors?

In the latest report from Betashares, the ETF provider contends that under the new laws, it could make it more expensive (tax-wise) to own a portfolio of individual shares.

However owning an ASX ETF (like Betashares A200) may become more tax-efficient.

The proposed CGT indexation rules would reduce after-tax returns for investors who hold diversified portfolios of individual shares. 

This is because losses on underperforming stocks cannot fully offset gains on outperforming stocks after adjusting for inflation.

By contrast, investors who hold a single pooled investment, such as an ETF, avoid this issue. This is because gains and losses are effectively netted within the fund, resulting in a lower overall tax burden.

Therefore, index ETFs could theoretically become more tax-efficient than directly holding a portfolio of shares under the new CGT regime.

The case for this ASX ETF

According to Betashares, one way an investor can seek to reduce the CGT indexation tax drag that stems from holding a portfolio of stocks in their own name is to invest in a market-capitalisation index tracking ETF instead.

A pooled managed investment scheme, like a managed fund or an ETF, will invariably have some capital gains that need to be distributed on an ongoing basis. But index ETFs, such as A200, are already very tax efficient at minimising those ongoing tax consequences.

And now they have the additional benefit of being able to effectively offset winners and losers within the ETF. When an investor disposes of an ETF, the capital gain is calculated based on the ETF on-market price they buy and sell at, not at the underlying stock level.

Foolish takeaway

While investors should be aware of the upcoming changes to CGT, taxes are only one part of your overall return.

The quality of your investments, diversification, risk tolerance, and time horizon are often more important.

Your personal circumstances also matter.

The impact of the proposed CGT changes depends on your marginal tax rate, whether you invest personally or through a trust, company, or superannuation fund, and how often you buy and sell investments.

 

 

 

 

 

The post Why the CGT changes may have handed this ASX ETF an advantage : Expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

DroneShield Ltd (ASX: DRO) shares started the week on the front foot, climbing 5% to $2.52.

That gain comes after a difficult month, with the defence technology stock still down around 15% over the past four weeks and 36% over the past six months. It’s been a painful reversal for investors who piled into the stock during this year’s defence rally.

But the recent pullback also changes the investment story. Much of the hype has now faded, leaving investors to focus on the fundamentals rather than momentum.

While DroneShield remains a high-risk investment, its exposure to one of defence’s fastest-growing markets could make today’s valuation far more attractive than it was just weeks ago.

Why did DroneShield shares fall?

Unlike many sharp sell-offs, there wasn’t a single announcement that triggered last month’s decline.

Instead, several factors appear to have combined to cool investor enthusiasm. Hopes of a lasting peace agreement in the Middle East may have reduced expectations for future defence spending, particularly in technologies linked to modern conflict.

At the same time, some investors likely questioned whether the stock’s rapid rise had already priced in years of future growth. Earlier this year DroneShield shares were trading at a valuation that left little room for disappointment.

The recent correction suggests the market has become more realistic about both the opportunities and the risks.

A fast-growing market

DroneShield isn’t trying to compete with the world’s largest defence contractors across every military capability. Instead, the company has focused almost entirely on counter-drone technology—a market that has rapidly shifted from a niche defence category to a strategic priority.

Conflicts in Ukraine and the Middle East have highlighted how relatively inexpensive drones can threaten military assets, airports, critical infrastructure and public events. As a result, governments around the world are increasing investment in drone detection and counter-drone systems.

Industry forecasts suggest the global counter-UAS market could exceed US$15 billion annually by the early 2030s, supported by rising defence budgets and growing adoption among both military and civilian customers.

Those structural growth drivers remain firmly in place for DroneShield shares.

A specialist competing with industry giants

DroneShield may be small, but it has successfully carved out a valuable niche. The company competes alongside defence heavyweights including RTX Corp (NYSE: RTX) and Lockheed Martin Corp (NYSE: LMT), all of which have significantly greater financial resources.

Rather than relying on a single product, DroneShield offers an integrated platform combining drone detection, electronic warfare systems, artificial intelligence-powered tracking and command-and-control software.

That specialised approach has helped the company secure an increasing number of contracts across Europe, Latin America and the Asia-Pacific region.

For a business of DroneShield’s size, those contract wins demonstrate growing credibility with defence agencies worldwide.

What do analysts think?

Broker opinion remains sharply divided. According to TradingView data, only four analysts currently cover DroneShield shares. Two rate the stock as a strong buy, while the other two recommend selling.

Despite that split, the average 12-month price target sits at $3.41, implying potential upside of around 35% from current levels. The most bullish analyst believes the shares could reach $4.80, representing potential upside of more than 90%. The most pessimistic prediction is 9% below the current share price.

The post DroneShield shares are rebounding. Is this the turning point? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• Here are the top 10 ASX 200 shares today
• Why did DroneShield shares crash 29% in June?
• Here are the top 10 ASX 200 shares today
• 3 reasons to buy DroneShield shares in July

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield and RTX. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Lockheed Martin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.