Global X has launched a UCITS ETF giving European investors exposure to 100 of the largest technology and technology-enabled growth companies listed in the US.

The Global X NYSE 100 UCITS ETF (NYSX) began trading on the London Stock Exchange and Deutsche Börse Xetra on 20 August. It is an accumulating ETF with a total expense ratio of 0.09%.

The ETF tracks the NYSE 100 Index, a rules-based index designed to capture large, liquid technology and technology-enabled growth businesses regardless of which US exchange they are listed on.

Rather than restricting the portfolio to companies formally classified as technology businesses, the index can also include selected companies from consumer discretionary, financials, industrials and media and communications. This is designed to capture businesses such as digital payments, online retail, social media and satellite technology that may sit outside traditional technology classifications.

Companies are ranked using a combination of market capitalisation, trading liquidity, price-to-sales ratios and recent sales growth. The resulting portfolio is modified market-cap weighted, with limits placed on the size of its largest holdings.

The approach puts the fund in competition with established technology and growth benchmarks such as the Nasdaq 100, but removes the requirement for companies to be listed on a particular exchange. The portfolio nevertheless remains heavily exposed to technology and the large US growth companies that already dominate many mainstream equity indices.

Our view

David Batchelor, senior analyst at QuotedData, said: “The interesting part of NYSX is not that investors need another way of owning US technology, but that it challenges one of the slightly strange features of the Nasdaq 100 – that eligibility depends partly on where a company happens to be listed. If the aim is to capture technology-enabled growth, widening the universe and looking across sector classifications arguably makes more sense.

The inclusion of sales growth and valuation in the selection process also gives the index a slightly different character from a straightforward market-cap portfolio.

However, investors should not confuse broader sector labels with genuine diversification. It remains fundamentally a bet on the large US growth complex and there is likely to be significant overlap with portfolios already holding the Nasdaq 100, S&P 500 or dedicated technology ETFs. At 0.09%, Global X is making the price difficult to argue with – the bigger question is whether the methodology behaves differently enough to warrant another allocation”.