Investing in Technology in Australia

How to invest in Australian technology stocks?

Looking back on 2021, the companies below were the top performers. All stocks listed had market caps between AU$80 million and AU$3 billion at that time.

• Novonix (ASX:NVX): Novonix is a battery company, first listed in December of 2015. Their ESS battery anode product is "2.5 times better for the environment than Chinese synthetic graphite EV and ESS battery anode material."

• Oneview Healthcare (ASX:ONE): Oneview offers a cloud-based software platform for use in healthcare. The company was founded by a patient who found his healthcare team wonderful but their software subpar, and founded the company to correct that problem.

• Emyria (ASX:EMD): Emyria is a clinical-stage biotech company working to use ethically sourced patient data to "help those who worry they are beyond help." The company pioneers new technologies and methodologies for gathering and utilizing patient data.

• PlaySide Studios (ASX:PLY): PlaySide is a game developer. While we often think of technology development for the important aspects of life, like healthcare or data optimization, we can forget that play is an important part of life, too. The company, which was founded in 2012, focuses on virtual reality, mobile gaming and PC gaming.

• Universal Biosensors (ASX:UBI): Medical technology company Universal Biosensors is focused on the research, development, and manufacture of diagnostic test systems. It launched in 2010.

How to invest in Australian technology ETFs?

A total of AU$39 billion was invested in Australian exchange-traded funds (ETFs) as of December 2021. The ETFs below are listed on the ASX, and they provide exposure to tech companies around the world.

• ETFS Robo Global Robotics and Automation ETF (ASX:ROBO): Tracking the ROBO Global Robotics and Automation Index, this ETF invests in AI and robotics companies that have market caps over AU$200 million. It was founded in September 2017, and has a 0.69 percent management fee and 82 holdings. Among its top holdings are iRhythm Technologies (NASDAQ:IRTC), weighted at 2.18 percent; Harmonic Drive Systems (TSE:6324), weighted at 1.87 percent; and Airtac International Group (TWD:1590), with a 1.79 percent weighting.

• BetaShares Global Cybersecurity ETF (ASX:HACK): Requiring no minimum investment, the BetaShares Global Cybersecurity ETF has a 0.67 percent management fee and 35 holdings. It has been in operation since August 2016. The ETF tracks the NASDAQ Consumer Technology Association Cybersecurity Index, providing exposure to global cybersecurity companies. Its top holdings include Palo Alto Networks (NASDAQ:PANW), weighted at 6.75 percent; Cisco Systems, with a 6.32 percent weighting; and Crowdstrike Holdings Class A (NASDAQ:CRWD), weighted at 5.58 percent.

• ETFS Morningstar Global Technology ETF (ASX:TECH): Tracking the Morningstar Developed Markets Technology Moat Focus Index, this ETF has a 0.45 percent management expense and 37 holdings. Founded in August 2017, it is an equal-weighted ETF that provides exposure to tech stocks around the world. The index specifically is composed of companies that have good price-to-fair-value ratios. The top holdings of this ETF include Palo Alto Networks with a 5.03 percent weighting; Cognizant Technology Solutions (NASDAQ:CTSH), also weighted at 5.03 percent; and SS&C Technology Holdings (NASDAQ:SSNC), with 4.56 percent.

• Global Robotics and Artificial Intelligence ETF (ASX:RBTZ): Providing exposure to companies focused on AI and industrial robotics sectors, the Global Robotics and Artificial Intelligence ETF has a 0.57 percent management fee and 38 holdings. Originating in September 2018, this ETF tracks the Indxx Global Robotics & Artificial Intelligence Thematic Index with no minimum investment required. Among the highest-weighted companies in this ETF are NVIDIA (NASDAQ:NVDA) at 14.08 percent, ABB (NYSE:ABB) at 10.95 percent and Intuitive Surgical (NASDAQ:ISRG) at a 10.53 percent weighting.

• Battery Tech and Lithium ETF (ASX:ACDC): The Battery Tech and Lithium ETF is the first ETF in Australia to track the energy storage and production sector. Since August 2018, this ETF specifically has tracked the Solactive Battery Value-Chain Index, which focuses on lithium, battery metals and battery storage companies. With 33 holdings, this ETF has an expense ratio of 0.69 percent. Top holdings in this ETF include Advanced Metallurgical Group (AMS:AMG) at 5.01 percent, Lockheed Martin (NYSE:LMT) at 4.41 percent and Mineral Resources (ASX:MIN) at a 4.25 percent weighting.

What's the outlook for technology in Australia?

In a September 2021 report, the Australian Academy of Science and the Australian Academy of Technology and Engineering urged their government to commit more heavily to the tech sector. The report offers a strategic plan and identifies several areas for the Australian government to focus on in order to shore up the country's technological future.

The report states, "Australia needs to plan strategically for what we call our digital future," and goes on to outline the keys to that plan, focusing on research and innovation and digital technologies as a growth sector.

The Australian government states its commitment to helping industry and business make the best use of technology to enhance their position.

Digital infrastructure is at the top of their list. In 2020, they set out into a 10 year plan to grow Australia's technological ecology. They have made a total investment of AU$1.2 billion into Australia's technological and digital future.

In a 2018 report published by the Australian government, technology was expected to have a pronounced impact across multiple industries in the country, anticipating a use of 3D printing in mining operations (enabling the production of spare parts on demand), and blockchain technology in agriculture.

The report also spoke of government support for education. Government support for a more adaptive education system will be central to these advancements as the sector changes rapidly and unpredictably. Small- and medium-sized business adoption will be key as well. Current barriers to tech adoption include lack of skills, poor internet access, cost and time.

The government is working with the tech industry to counter these roadblocks and strengthen the sector through its National Broadband Network at affordable prices, among other policy initiatives.

Underpinning future growth, PwC notes, will be the development of a sophisticated tech workforce.

The demand for skilled workers is projected to reach 6.5 million by 2025, and the cross pollination of tech and other major sectors is providing new opportunities for growth and advancement to create a sustainable advantage in the global economy.