The ETF Lyxor TNO (Technology Europe UCITS) created in 08/2006, is listed in Euro on Euronext and seeks to replicate the index Stoxx Europe 600 Technology (SX8R) which is composed of the 30main European technology stocks.
The costs of this ETF are 0.3% and the AUM approximately 50M€. Replication is indirect (via Swap) and there is a dividend capitalization policy.
Index profile
This index is quite concentrated since it has only 30 values. The first four stocks in the index (SAP, ASML Holding, Amadeus and Nokia) account for 55% of the total and have fairly high market capitalizations (€ 115bn for SAP, € 60bn for ASML, €30bn for Amadeus and Nokia).
This sector is characterized by high growth rates and high multiples, but most of the companies that make up the index do not disappoint, and on the contrary regularly revise their prospects upward reflecting very strong market positions, most often world leader with duopoly situation (for SAP) or leading actors (ASML for laser lithography).
The high valuations of this index imply double-digit growth rates over time. However, the long-term themes tend to multiply (Blockchain, AI, Robotics ...) which always feeds more hope of growth.
In 2017, the TNO ETF posted a 21% performance, twice the performance of stoxx600 (10.6%), and +3% in 2018 compared to -10.7% for Stoxx600NR but with a 26% drop in the fourth quarter in the wake of the Nasdaq and GAFAS under strong pressure because of demanding valuation in a context of credit tightening by the FED and trade war between the US and China. A strong rebound occurred in January and February which turned into a positive turnaround in March (+ 12.6% since the beginning of the year), while corporate results were finally reassuring in the semiconductors and software sectors and specifically better than expected for ASML, Infineon and STMicroelectronics.
The technology sector is sensitive to the evolution of the trade war while some important customer sectors (smartphone and automotive for example) are closely linked to Chinese growth.
Alternative ETFs : EXV3 (iShares, Euro), SYQ (BNP Paribas Easy, Euro)
We are buyers of this ETF (TNO is part of our Megatrend Euro Portfolio)
