The S&P/ASX All Technology Index, launched in partnership with S&P Dow Jones Indices, will go live on Monday under the code XTX.
The new index brings together ASX-listed companies in the technology sector, starting with 46 members with a combined market capitalization of around $104 billion.
At the top of its constituents are accounting software provider Xero, stock transfer company Computershare and buy now, pay later giant Afterpay. Pension fund service provider Link Administration was also in the top 10.
At launch, the index includes three New Zealand companies, two American companies and one Irish company.
Max Cunningham, executive general manager of listing and issuer services at the ASX, said he expects more foreign listings, adding that one of the most important factors attracting foreign companies to the ASX is the local superannuation system.
“Given the recent enrollments we had in December and a very healthy pipeline for 2020, this part of the cohort is likely to increase,” Mr Cunningham said.
“Our pension pool now reaches $2 trillion and is projected to grow to $10 trillion by the middle of the next decade. This currently makes us the fourth largest investable pension fund in the world.
“And if demographics stay as they are by mid-decade, we should be number two in the world for investable pension funds globally, not per capita, mind you, but in total value absolute in dollars. »
Currently on the ASX, there are more than 200 listed technology companies valued at almost $115 billion.
The index allows early entry to ASX-listed technology companies, with a minimum float adjusted market capitalization of $120 million, a few hundred million dollars less than the current qualifying value for the S&P/ASX 300.
Nor does it have a defined number of constituents; its composition may change with each quarterly rebalancing.
BetaShares is the first provider to roll out an ETF tracking the index, a week and a half after its launch.
ASX CEO and Managing Director Dominic Stevens said the index would improve the profile and understanding of Australia’s listed technology companies and increase opportunities for investors.
“We have recently seen considerable growth in the number of technology companies listed on the ASX and the quality of their performance,” Mr Stevens said.
“Over the past three years, the annualized total return of the S&P/ASX 200 has been around 10 per cent, while the return of the new All Tech Index over the same period – had it existed – would have been more than 20 percent.
“The All Tech Index recognizes the critical mass of ASX-listed technology companies. It offers investors the opportunity to see how the sector is evolving and gives them a benchmark to measure its performance.
Mr Stevens added that a vibrant technology sector is good for Australia.
“This helps drive economic growth, strengthens the relevance of our capital markets and encourages job creation and innovation domestically,” he said.
