- Last month, the ALPS | O’Shares Global Internet Giants ETF (OGIG) rallied 12.10%, outpacing competitors and broad US technology indices, with the fund outperforming the NASDAQ 100 (NDX) Index by 437 basis points (bps). Despite global growth concerns, Info Tech stocks overtook all other S&P 500 sector returns on the month, with global internet stocks benefiting from the artificial intelligence (AI) frenzy and positive earnings announcements.
- Among OGIG’s global internet segments, companies with exposure to artificial intelligence (AI) and cyber security led returns in May. Software solution provider, Palantir Technologies Inc. (PLTR US, 1.48% weight*), was OGIG’s top performer, rocketing nearly 90% in May following the company’s strong earnings results and full-year forecast upgrades. Palantir posted a surprise first-quarter profit on the back of unprecedented demand for its AI tool. Another beneficiary of the AI frenzy was Monday.com LTD (MNDY US, 1.45% weight*), which returned 47.80% last month after the company reported strong revenue growth and full-year guidance due to promising customer acquisition numbers and new capabilities for third-party developers to build AI apps on its platform.
- OGIG cloud-based security software company, Zscaler Inc. (ZS US, 1.61% weight*), rallied over 50% last month after announcing strong preliminary Q1 results and a boost to its annual forecast. The company’s results were a welcomed sign for the cybersecurity industry, as the preliminary results brought markets relief to sentiment of a potential slowdown in the space. OGIG’s cybersecurity exposure caught fire throughout the month on Zscaler’s preliminary earnings results, with Cloudflare Inc. (NET US, 1.60% weight*) gaining 46.99%, Crowdstrike Holdings (CRWD US, 1.89% weight*) gaining 33.39%, Okta (OKTA US, 0.66% weight*) gaining 32.64%, SentinelOne (S US, 1.68% weight*) gaining 33.04% and Palo Alto Networks (PANW US, 1.45% weight*) gaining 16.95%.
- Rounding out impressive earnings news for OGIG in May, Confluent Inc. (CFLT US, 1.53% weight*), an application infrastructure designer, rose 44.27% last month after reporting better-than-expected earnings on strong cloud application growth within financial services. Datadog Inc. (DDOG US, 1.74% weight*), a cloud-based analytics platform, also surged 40.86% following reported earnings above consensus with increased FY guidance on strong net customer additions and retention. Additionally, BILL Holdings Inc. (BILL US, 1.45% weight*), jumped nearly 35% in May after the cloud software company boosted FY guidance on the back of higher payment volume and blowout Q3 customer acquisitions.
“If you wheel these technologies (AI) correctly, safely and securely, you have a weapon that will allow you to win, that will scare your competitors and adversaries.”
– Alex Karp, Palantir Chief Executive Officer, May 8, 2023
OGIG’s New-Age Internet Technology Stocks Look to Sustain Their Countertrend Rally
- New-age digital transformation, and notably AI beneficiaries, have sparked a frenzy this year despite numerous rate-hikes, banking sector concerns, and dampening market liquidity. Notably, the S&P 500 Tech sector is now only ~8% off the bull market highs made in 2021, leading all other S&P 500 sectors YTD by over 600 bps. While roughly 3/4ths of the S&P 500 outperformance has been attributed to 3 names (AAPL, MSFT, NVDA – all members of the trillion-dollar club), future growth opportunities and market gains in tech could reside in relatively smaller names that drive innovation on a global scale.
- Looking under the hood of the broad US technology index, the Nasdaq 100 Index (NDX), concentration risk has become further inflated by the mega-cap tech leaders. While the run-up in mega-cap tech has been beneficial for US investors thus far in 2023, a looming recession could make those starry valuations come back to historical norms (note: MSFT, AAPL, NVDA, AMZN, & META account for ~43% of the NDX).
- The ALPS | O’Shares Global Internet Giants ETF (OGIG) can help diversify the concentration risk of the NDX with its breadth of global tech holdings across all market caps, with much less concentration in mega-cap tech than NDX and better return profiles.
- OGIG’s total portfolio of US and non-US names outperformed the NDX Index by over 425 bps in May, attributed to the security selection of diversified internet technology names.
- As of 05/31/2023, OGIG has an 18.99% weighting to mega-cap tech, compared to the NDX weight of 54.55%.
Performance Summary
| 1 Month | YTD | 1 Y | 3 Y | |
| ALPS | O’Shares Global Internet Giants ETF (OGIG) | 12.10% | 25.63% | 7.90% | -3.37% |
| O’Shares Global Internet Giants Index | 12.15% | 25.92% | 8.51% | -2.88% |
| NASDAQ 100 Index | 7.73% | 30.79% | 13.77% | 15.14% |
Source: Bloomberg L.P., as of 05/31/2023
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.
For standardized performance please click here.
Performance data prior to 06/21/2022 reflects the performance of the Fund as managed under the OSI ETF Trust.
* Weight in OGIG as of 05/31/2023
Top 10 Holdings
| Microsoft Corp | 6.80% | Snowflake Inc | 2.06% | |
| Amazon.com Inc | 5.03% | Crowdstrike Holdings Inc | 1.89% | |
| Alphabet Inc | 4.96% | Meituan | 1.81% | |
| Meta Platforms Inc | 2.20% | Datadog Inc | 1.74% | |
| ServiceNow Inc | 2.10% | MongoDB Inc | 1.68% |
As of 05/31/2023, 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 are not individually redeemable. Investors buy and sell shares on a secondary market. Only market makers or “authorized participants” may trade directly with the Fund, typically in blocks of 5,000, 25,000 or 50,000 shares.
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.
Effective 06/17/2022, the O’Shares Global Internet Giants ETF reorganized into the ALPS | O’Shares Global Internet Giants ETF.
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.
Basis Point (bps): a unit that is equal to 1/100th of 1% and is used to denote the change in a financial instrument.
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.
One may not invest directly in an index.
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
OUS000208 09/30/2023
