The S&P/ASX 200 Information Technology Index (XIJ) tracks the performance of companies included in the ASX 200 within the information technology sector. The companies are also classified as members of the GICS information technology sector and sub-industries.
S&P/ASX 200 Information Technology Index Price & Chart
Companies in the index are involved in software, digital platforms, electronic services, and other tech-driven industries, reflecting the growing influence of technology in shaping the Australian economy.
Since its launch in July 2002, the index has been a benchmark for investors seeking to track the growth within Australia’s tech landscape. Unlike the broader All Technology index, which holds 42 stocks, the Information Technology index is smaller, comprising just 11 companies, with the largest constituent making up 30.7% of the index's weighting. The index is rebalanced quarterly in March, June, September, and December.
S&P/ASX 200 Information Technology Index Performance
Just like its All Technology counterpart, the Information Technology index has performed strongly, rallying significantly in 2024, with a couple of brief pullbacks along the way. Here is the index's performance:
| Period | Total Return |
|---|---|
| 1-Year Return | +51.09% |
| 3-Year Return | +15.63% |
| 5-Year Return | +12.42% |
| 10-Year Return | +13.68% |
Australian Information Technology Stocks Forecast
The Bull Argument: Like the general tech sector, many analysts believe the Australian information technology sector will continue to benefit from strong demand. This is especially true given the emergence of technological advances such as artificial intelligence. The Tech Council of Australia said recently that artificial intelligence is the most influential technological trend for 2025, with one-third of industry leaders in the country seeing a significant opportunity to harness the technology to improve efficiency.
Meanwhile, according to Statista, the Australian IT Services market is expected to generate a revenue of $38.48 billion by 2025, with the dominant segment in the market being IT Outsourcing, which is forecast to reach a market volume of $15.39 billion in the same year. The estimated annual growth rate (CAGR 2025-2029) is 5.82%.
Elsewhere, other aspects, such as lower interest rates and a healthy global economy, could also boost technology stocks in Australia.
The Bear Argument: When it comes to bearish arguments for the sector, investors should consider potential risks, such as inflation, which could continue to remain stubborn. This could result in the potential for interest rates to be raised. As a result, valuations of high-growth information technology stocks in Australia may be pressured. Additionally, global competition, regulatory challenges, and potential economic slowdown could weigh on performance. Currency fluctuations and dependence on international markets may also pose risks for some constituents.
Our View: As with anything tech-related these days, the information technology sector in Australia also represents an exciting opportunity. However, investors should also acknowledge that while the industry offers strong growth potential, it is also accompanied by higher levels of volatility. Even so, investors seeking exposure to innovative and forward-looking companies will find the Australian IT industry a compelling choice as the country continues to establish itself as a global player in the technology space.
Who Should Invest in The Australian IT Industry?
Those looking for ETFs in the sector may want to consider the Global X Morningstar Global Technology ETF, which invests in businesses that offer computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), and/or cloud and edge computing infrastructure and hardware. In addition, the BetaShares S&P/ASX Australian Technology ETF holds ASX-listed companies in market segments such as information technology (IT).
However, while the sector is attractive, it won't suit every type of investor. The S&P/ASX 200 Information Technology Index is well-suited for investors who:
- Are Growth-focused: Those looking for exposure to high-growth sectors and innovative industries will likely be drawn to this sector.
- Are Tech enthusiasts: Investors interested in technology and its impact on the economy may also appreciate many names or funds in the sector.
- Are Risk-tolerant investors: Given the sector's inherent volatility, this index is better suited to individuals who can handle short-term market fluctuations in pursuit of long-term gains.
