In 2017, the World Economic Forum (WEF) devoted its annual conference in Davos to how drastically technology is likely to shape the world around us. They argued we are on the brink of a fourth industrial revolution in which digital technologies would dramatically alter the way we live in the world. Working from home during the COVID pandemic gave us all a taste of just how close we are to this future.
By the end of the same year, Sygnia introduced its 4th Industrial Revolution ETF (4IR). If the future is as the WEF predicted, supporting companies that would power the revolution makes perfect sense. Selecting a winner from a global platform of unknown tech companies is a full-time job, so backing an ETF that does the legwork ensures you are backing the winners and booting the losers. According to Sygnia, these companies include, “autonomous vehicles, clean tech, drones, 3D printing, robotics, nanotechnology, smart buildings, virtual reality, cybersecurity, space and wearables”.
The index was created by artificial intelligence company Kensho. When first introduced, Kensho were not at all keen on sharing proprietary information in the form of constituent details. As we outlined in this post, finding the complete list of constituents required a fair bit of legwork.
Kensho was acquired by index house S&P Global in 2018, which made access to the index constituents much easier. These days the full list of fund constituents are readily available on the Sygnia website. However, since many of these companies are not well-known, it’s worth a bit of investigation before committing. The military is often the first port of call for many new technologies. Military spending allows for more expedient research and development. If you take issue with supporting companies that make their money from the military, this might not be the ETF for you.
Like any ETF, the makeup of the constituents has changed over the past three years. The fund has 414 constituents across various sectors. As expected, the IT and industrials sectors dominate the ETF, but because of the sheer number of constituents, no single company presents a concentration risk.
The biggest holding, at a tiny 1.8%, is Nvidia – a company that makes graphics processing units for computers. Next in line is Swiss semiconductor chip manufacturer, ST. Multinational robotics giant ABB is a specialist in automation and represents 1.3% of the index. Also in the top ten holdings are:
- Visteon – a Ford spinoff that manufacturers vehicle electronics at 1.2%
- Ambarella – a company that designs but does not manufacture semiconductors at 1.18%
- Harris Corp – a military equipment company headquartered in Florida at 1.15%
- Himax Technologies – a Taiwan-based semiconductor company at 1.1%
- Elbit System – an Israeli defense electronics manufacturer at 1.09%
- Gopro Inc – the American action camera manufacturer at 1.06%
- Ormat Technologies – a renewable energy company based in Nevada at 1.06%
The companies represented in this index are listed all over the world, but the index does include some bigger US players like Apple, Alphabet and Facebook. Since this is not a broad-market index, it’s worth treating it like a sub-index in your portfolio. The fund is classified as a high risk fund with an investment horizon of five years or more. A 5% addition to your overall portfolio should give you a sense of the nature of this ETF. Once you’ve become better acquainted you could always get more.
|ETF name||Sygnia iTrix 4th Industrial Revolution ETF|
|Issue date||6 December 2017|
|Total investment cost||0.65%|
|ETF Benchmark||Kensho New Economies Composite Index|
|Tax-free savings account||Investment allowed|
|ETF major holdings||View the full list here.|
|Performance 1 year||+36%|
|Performance since inception||+67.5%|
Click here to meet the Just One Lap team at one of our live, free events.