1nvest S&P 500 Info Tech Feeder ETF
Stock markets across the globe have had a difficult year and the S&P 500 Info Tech Index is no exception. Global fears of a recession in the world’s largest economy have sent the markets to negative territory. The market is bracing for volatility in the short term as Fed chairman Jerome Powell made strong remarks about inflation, stating that the US would “use all tools forcefully for some time” and acknowledging it would inflict some pain, which is the unfortunate result of taming inflation. The dollar has gained significantly on the back of the recent interest rate hikes from the Federal Reserve Bank.
Companies in the index have a global footprint. The dollar strength has made it prohibitively difficult for customers in other countries to purchase products that are priced in dollars, with latest results from Microsoft confirming the difficulty in operating under a stronger dollar.
Apple, the fund’s largest holding, has massive cash on its balance sheet. Following a new US law in 2018, the company has been on an endeavour to return the cash to investors in the form of cash dividends and share buybacks. This reduced the cash on hand to $51.5bn in March 2022 from $100.6bn in March 2019. The CFO expects the cash to reduce to net zero over the next couple of years.
The Fund has delivered an impressive 27.28% since inception (7 Mar 2018); however it is in the red year-to-date. It has a reasonable total investment cost of 0.35% and a low tracking error of 0.60%, suggesting frequent rebalancing to match the underlying index.
The objective of the 1nvest S&P 500 Info Tech Index Feeder ETF is to track the S&P 500 Capped 35/20 Information Technology Index as closely as possible by utilising the Feeder Fund framework.
Fund suitability
Fees
Top 10 holdings
Analysis of the fund’s strategy
The 1nvest S&P 500 Info Tech Index Feeder ETF tracks the S&P 500 Capped 35/20 Information Technology Index to provide investors with returns, net of fees.
1nvest S&P 500 Info Tech Feeder ETF (JSE:ETF5IT)
New to investing and want to learn more about other ETFs?
Read: Top Fund Picks for December
Background: Exchange-traded funds (ETFs)
Exchange-traded funds (ETFs) are passively managed investment funds that track the performance of a basket of pre-determined assets. They are traded the same way as shares and the main difference is that whereas one share gives exposure to one company, an ETF gives exposure to numerous companies in a single transaction. ETFs can be traded through your broker in the same way as shares, say, on the EasyEquities platform. In addition, they qualify for the tax-free savings account, where both capital and income gains accumulate tax free.
Benefits of ETFs
Disclaimer
This research report was issued by Intellidex (Pty) Ltd. Intellidex aims to deliver impartial and objective assessments of securities, companies or other subjects. This document is issued for information purposes only and is not an offer to purchase or sell investments or related financial instruments. Individuals should undertake their own analysis and/or seek professional advice based on their specific needs before purchasing or selling investments. The information contained in this report is based on sources that Intellidex believes to be reliable, but Intellidex makes no representations or warranties regarding the completeness, accuracy or reliability of any information, facts, estimates, forecasts or opinions contained in this document. The information, opinions, estimates, assumptions, target prices and forecasts could change at any time without prior notice. Intellidex is under no obligation to inform any recipient of this document of any such changes. Intellidex, its directors, officers, staff, agents or associates shall have no liability for any loss or damage of any nature arising from the use of this document.
Remuneration
The opinions or recommendations contained in this report represent the true views of the analyst(s) responsible for preparing the report. The analyst’s remuneration is not affected by the opinions or recommendations contained in this report, although his/her remuneration may be affected by the overall quality of their research, feedback from clients and the financial performance of Intellidex (Pty) Ltd.
Intellidex staff may hold positions in financial instruments or derivatives thereof which are discussed in this document. Trades by staff are subject to Intellidex’s code of conduct which can be obtained by emailing mail@intellidex.coza.
Intellidex may also have, or be seeking to have, a consulting or other professional relationship with the companies mentioned in this report.