A new exchange-traded fund gives Kiwis access to US tech giants.
The US tech sector is a strong opportunity for Kiwi investors, despite some “unknowns” around the economic impact of Donald Trump’s second term in the White House.
So says Thomas Taw, the Hong Kong-based head of the Asia Pacific Investment Strategy team at BlackRock, whose iShares arm works in collaboration with the New Zealand investment fund manager Smart.
“We see the US market continuing to stand out compared to other developed markets thanks to stronger growth,” Taw says.
“While there are a lot of unknowns about how President Trump’s actions in areas such as tariffs will impact, there seems every reason to be bullish that US corporate strength will remain strong given the pro-US policies he is pursuing.”
Taw says the US tech sector in particular is well positioned. “Tech has performed well over the past two years and has the cash on balance sheets to ride out many economic or political storms.”
Taw’s comments come after Smart’s launch late last year of four new ETFs (exchange-traded funds). One of these, the Smart US Technology (NZD Hedged) ETF, tracks an index of US IT sector companies, as defined by the Global Industry Classification Standard (GICS).
This ETF holds a diversified portfolio of 69 stocks, including some of America’s largest tech companies, such as Apple, Microsoft, Nvidia, Salesforce and Oracle, giving Kiwi investors access to these big names without needing to purchase shares directly or worrying about offshore investing.
Taw says the Smart US Technology (NZD Hedged) ETF, along with Smart’s other ETFs, allows investors to own shares in multiple companies in a single holding without having to pick individual stocks. These ETFs are listed as Portfolio Investment Entities (PIEs) which are taxed at a rate of 28%.
Looking ahead, Taw says BlackRock has confidence in US corporate strength as US equities have consistently outpaced their global peers.
“We think that will continue because the US benefits from mega forces such as digital disruption and AI which drive corporate earnings,” he says. “This is supported by a favourable growth outlook along with potential tax cuts and regulatory easing in America.”
Anna Scott, chief executive of Smart in New Zealand, emphasises that a key benefit of the Smart US Technology ETF is its NZ currency hedging, a measure designed to lessen the impact of US currency movements.
New Zealand investors’ returns from an unhedged fund are influenced by both the market’s performance and currency fluctuations. In contrast, Scott explains that an NZD hedged fund aims to minimise the impact of these currency fluctuations.
Scott also acknowledges that innovation-driven sectors, like tech, can be volatile. “Recent fluctuations in US tech shares show just how quickly the innovation landscape can shift,” she says.
She says there is a big spread in ages and demographics of people interested in or already investing through the Smart US Technology (NZD Hedged) ETF, highlighting recent research which identified three main reasons Kiwi investors use ETFs: to save time (67% of current ETF investors), diversification (60%), and to have access and exposure to overseas markets (42%).
Smart is a wholly owned subsidiary of NZX and has more than $13 billion in funds under management. It already enables Kiwis to diversify their portfolios across 40 ETFs and the four new ETFs add to that offering.
She says the collaboration with BlackRock is important because it enables New Zealand investors to tap into their experience and global reach while at the same time enjoying Smart’s local market knowledge.
“At Smart we aim to educate the wider community about building wealth, removing hurdles to investing and building confidence among all demographics to learn about investing.”
More information:
More from Smart:
Guide: Discover the Smart US Technology (NZD Hedged) ETF
Guide: How to invest in Smart ETFs
The Smart Exchange Traded Funds are issued by Smartshares Limited (Smart). The product disclosure statements are available at smartinvest.co.nz. Investing involves risk. The value of your investments can go down as well as up. Returns are not guaranteed. We recommend you seek professional assistance from a licensed Financial Advice Provider before making any investment decision.
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