- Last month, the ALPS | O’Shares Global Internet Giants ETF (OGIG) rallied 6.30%, outpacing competitors on the back of strong earnings and strength within artificial intelligence (AI) beneficiaries outside of semiconductors and mega-cap tech.
- OGIG had several direct AI beneficiaries in the fund last month through its diversified internet and software sub-themes. Database management company, Oracle Corp. (ORCL US, 1.08% weight*), surged 20.49% last month after reporting better-than-expected earnings with the company’s cloud infrastructure business unit continuing to capture the AI trend through its integration across Microsoft (MSFT US, 5.88% weight*) Azure’s OpenAI and Google (GOOGL US, 6.04% weight*) Cloud. Another OGIG AI beneficiary was software company, Adobe Inc. (ADBE US, 1.51% weight*), who returned nearly 24.91% in June after reporting strong second-quarter results on the heels of new monetization efforts through its generative-AI product, Adobe GenStudio, that helped quell investor fears of AI as a threat to the company’s creative studio product suite.
- Among OGIG’s global internet segments, companies exposed to cyber security led returns in June. Enterprise cybersecurity provider, Crowdstrike Holdings Inc. (CRWD US, 1.79% weight*), was one of OGIG’s top performers, rocketing 22.16% in June following the company’s strong earnings results and full-year forecast upgrades on strong customer adoption of its newest AI platform, Crowdstrike Falcon. Identity security provider, CyberArk Software Ltd. (CYBR US, 1.27% weight*), also rallied 19.27% during June after Coca-Cola bottling company (CCH LN, not in OGIG) announced it would use CyberArk to protect its assets and data during their cloud migration.
- While AI contributed to a portion of fund returns in June, OGIG’s wider net of innovative tech names had an array of positive news and earnings announcements that drove the fund higher. Notably, popular real-estate marketplace, Zillow Group (Z US, 0.62% weight*), gained nearly 14% on a top insider buying the stock as well as analysts touting market share gains in its US residential listings and rentals. OGIG’s software allocation also saw large gains in June due to a momentum change and positive sell-side commentary, with SentinelOne Inc. (S US, 1.47% weight*), DataDog Inc. (DDOG US, 1.40% weight*) and ZScaler Inc. (ZS US, 1.50% weight*) rising 25.07%, 17.71% and 13.08%, respectively, on the bullish positioning shift for possible AI beneficiaries.
“More broadly, we believe the AI theme has room to run, with scope for its beneficiaries to broaden as investors look to the next phase of the AI trade.”
– Ryan Hammond, Goldman Sachs US Portfolio Strategy Research, June 25, 2024
OGIG – Global Internet by Name; Broadening Tech Dominance by Trade
- The AI trade continues to propel the tech sector and US markets as the gains have been supported by higher expected future earnings growth. However, history shows us that with any new game-changing technology, the first adopters tend to lose market share over time as potential use cases and returns broaden out from a handful of names to other innovative companies across all sectors of the market. With Nvidia (NVDA US, not in OGIG) driving 30% of gains in the S&P 500 through the first half of the year, the time for investors to “look outside of the core” for potential returns is starting to take hold as the S&P 500 concentration risk is at record extremes. The future winners of the AI theme are likely to come from companies that have not already priced in the AI hype but are poised to capitalize on the potential AI growth across all sectors of the market.
- The ALPS | O’Shares Global Internet Giants ETF (OGIG) provides exposure to companies furthering AI and internet technology on a global scale, without over-allocating to highly cyclical semiconductors and NVDA (0% aggregate weight in OGIG). Importantly, OGIG’s holdings derive at least 50% of their revenue from internet activities that expand into tech industries, such as Software Systems and Application Software, that are also set to see outsized gains from AI adoption.
- OGIG’s forward earnings growth is expected to outpace the S&P 500 and Nasdaq 100 in each of the next three years.
- OGIG’s globally diversified holdings are expected to print strong earnings growth going forward by not only capitalizing on AI trends but also on the growth of the strengthening consumer within emerging markets.
Performance Summary
| Cumulative | Annualized |
|||||||
| 1 M | YTD | 1 Y | 3 Y | 1 Y | 3 Y | 5 Y | SI | |
| OGIG - NAV (Net Asset Value) | 6.30% | 8.12% | 22.91% | -30.89% | 22.91% | -11.60% | 9.49% | 7.79% |
| OGIG - Market Price | 6.14% | 7.88% | 23.09% | -30.99% | 23.09% | -11.64% | 9.52% | 7.60% |
| O’Shares Global Internet Giants Index - TR | 6.31% | 8.37% | 23.54% | -29.90% | 23.54% | -11.17% | 10.04% | 8.35% |
| NASDAQ 100 Index - TR | 6.27% | 17.47% | 30.77% | 38.62% | 30.77% | 11.51% | 21.74% | 19.22% |
Source: Bloomberg L.P. and SS&C ALPS Advisors, as of 06/30/2024
Performance data quoted represents past performance. Past performance is no guarantee of future results so that shares, when redeemed, may be worth more or less than their original cost. The investment return and principal value will fluctuate. Current performance may be higher or lower than the performance quoted. For current month-end performance call 1-866-759-5679 or visit www.alpsfunds.com. Performance includes reinvested distributions and capital gains.
Market Price is based on the midpoint of the bid/ask spread at 4 p.m. ET and does not represent the returns an investor would receive if shares were traded at other times.
Performance data prior to 06/21/2022 reflects the performance of the Fund as managed under the OSI ETF Trust.
Fund inception date: 06/05/2018, date reflects the commencement of investment operations.
Total Operating Expenses: 0.48%
* Weight in OGIG as of 06/30/2024
Top 10 Holdings
| Alphabet Inc | 6.04% | ServiceNow Inc | 2.02% | |
| Amazon.com Inc | 5.93% | Crowdstrike Holdings Inc | 1.79% | |
| Microsoft Corp | 5.88% | MercadoLibre Inc | 1.69% | |
| Meta Platforms Inc | 5.58% | Netflix Inc | 1.67% | |
| PDD Holdings Inc | 2.35% | Samsara Inc | 1.62% |
As of 06/30/2024, subject to change
Important Disclosures & Definitions
An investor should consider the investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus containing this and other information, call 1-866-759-5679 or visit www.alpsfunds.com. Read the prospectus carefully before investing.
Shares of ETFs are bought and sold at market price (not NAV) and are not individually redeemable.
Performance data quoted represents past performance. Past performance is no guarantee of future results; current performance may be higher or lower than performance quoted.
All investments are subject to risks, including the loss of money and the possible loss of the entire principal amount invested. Additional information regarding the risks of this investment is available in the prospectus.
Concentration in a particular industry or sector will subject the Fund to loss due to adverse occurrences that may affect that industry or sector. The Fund may use derivatives which may involve risks different from, or greater than, those associated with more traditional investments. A Fund’s emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Also, a company may reduce or eliminate its dividend after the Fund’s purchase of such a company’s securities.
Companies involved with internet technology and e-commerce are exposed to risks associated with rapid advances in technology, obsolescence of current products and services, the finite life of patents and the constant threat of global competition and substitutes.
The Fund employs a “passive management” - or indexing - investment approach and seeks investment results that correspond (before fees and expenses) generally to the performance of its underlying index. Unlike many investment companies, the Fund is not “actively” managed. Therefore, it would not necessarily sell or buy a security unless that security is removed from or added to the underlying index, respectively.
Mega Cap: a designation for the largest companies in the investment universe as measured by market capitalization. While the exact thresholds change with market conditions, mega cap generally refers to companies with a market capitalization above $200 billion.
NASDAQ 100 Index: one of the world’s preeminent large-cap growth indexes. It includes 100 of the largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization.
O’Shares Global Internet Giants Index: a rules-based index intended to give investors a means of tracking stocks exhibiting quality and growth characteristics in the internet technology and e-commerce business segments and pass screens for gross margin and cash burn sustainability. Companies included in OGIGX derive at least 50% of their revenues from a) internet technology companies whose principal business is to provide the technologies that support internet commerce; and b) internet commerce companies whose principal business is to sell products and services via the internet.
S&P 500 Index: widely regarded as the best single gauge of large-cap US equities. The index includes 500 leading companies and covers approximately 80% of available market capitalization.
One may not invest directly in an index.
ALPS Advisors, Inc., registered investment adviser with the SEC, is the investment adviser to the Fund. ALPS Advisors, Inc. and ALPS Portfolio Solutions Distributor, Inc., affiliated entities, are unaffiliated with O’Shares Investments.
ALPS Portfolio Solutions Distributor, Inc. is the distributor for the Fund.
Not FDIC Insured • No Bank Guarantee • May Lose Value
OUS000317 09/30/2024
