2 outstanding tech ETFs for ASX investors to buy this month
Image source: Getty ImagesExchange traded funds (ETFs) continue to grow in popularity with Australianinvestors.In fact, local investors are now estimated to have invested a whopping $100billion into them, according to the AFR.And it isn’t hard to see why. Through a single investment, ETFs allowinvestors to invest in a large number of shares that they wouldn’t ordinarilyhave access to.But which ETFs should you add to your portfolio? Two quality options toconsider are listed below:
BetaShares Asia Technology Tigers ETF (ASX: ASIA)
The first ETF to look at is the BetaShares Asia Technology Tigers ETF. Thispopular ETF gives investors exposure to a number of the biggest tech shares inthe Asia market.This is certainly a great space to be in. Technological adoption in Asia issurpassing the West and is expected to underpin strong growth over the nextdecade.The BetaShares Asia Technology Tigers ETF is currently invested in a total of50 companies. This includes Alibaba, Baidu, JD.com, NetEase, and Tencent.The latter is a multinational technology conglomerate and one of the largestcompanies in the world. Its communication and social platforms, Weixin(WeChat) and QQ, connect over a billion users with each other and with digitalcontent and services.
VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)
Another ETF to consider is the VanEck Vectors Video Gaming and eSports ETF.This ETF gives investors exposure to a portfolio of the largest companiesinvolved in video game development, eSports, and related hardware and softwareglobally.VanEck notes that these companies are in a position to benefit from theincreasing popularity of video games and eSports. Furthermore, it notes thatthe fund gives investors the option to diversify their portfolio by providingopportunities away from tech giants Apple, Amazon, Facebook, Google andMicrosoft.Among its holdings are graphics processing units (GPU) producer Nvidia, gamesdeveloper Take-Two Interactive (GTA, Red Dead), Electronic Arts (FIFA, Sims,Apex Legends), and Activision Blizzard (Call of Duty).My top 10 Australian ASX ETFs for 2021In this Best ETFs Australia review, I’ll take you through my top 10 ASX ETFsfor 2021 covering technology, diversified ETFs, defensive ETFs, and ethicalETFs.In no particular order, here they are:
The BetaShares Global Cybersecurity ETF (ASX: HACK) is one of my top ASXsector ETF picks for 2021 and beyond. Cybersecurity is a rapidly-growingindustry and with the adoption of cloud computing, e-commerce, and theInternet of Things (IoT), the security market looks set to continue growingsteadily for many years to come.HACK provides exposure to a portfolio of around 40 companies coveringsubsectors including systems software, communications equipment, and aerospaceand defence. This has been a successful strategy so far, generating highreturns and closely tracking its benchmark since inception.I think HACK would make a good tactical exposure in a diversified portfolioand, because most of its holdings aren’t huge companies, it has very minimalcross over with the iShares S&P 500 ETF (ASX: IVV) or the BetaShares NASDAQ100 ETF (ASX: NDQ) and could comfortably be held in conjunction with one ofthese ETFs.
The BetaShares Asia Technology Tigers ETF (ASX: ASIA) was one of the top-performing ASX ETFs in 2020, returning around 62% during the year (this comeswith the usual warning that this ETF has a short track record and shouldn’treally be judged on past performance).ASIA holds a portfolio of approximately 50 technology companies from China,South Korea, Taiwan and India, including some big names like SamsungElectronics Co Ltd and Tencent Holdings Ltd.The ASIA ETF provides exposure to a range of technology sub-sectors includingelectronic manufacturing, IT consulting, interactive home entertainment, andsemiconductors. In an ETF portfolio, ASIA can provide growth potential whilediversifying away from the usual US tech shares investors look to for growth.
So, those are my top 10 ASX ETFs for 2021 (click the links for the fullreports):These might not be the absolute top-performing ETFs of 2021 — so I’m notsuggesting they will perform best over every 12-month period — but there’s agood mix of diversified funds, ethical ETFs, high growth tech exposure andmore defensive assets; ETFs can offer something for everyone.Whether you’re new to investing or an experienced investor looking to expandyour portfolio, I hope this list has given you some ideas on where to look in2021.5 ETFs for technology investorsTechnology is a hugely popular investment trend. That’s hardly surprising –it’s everywhere (you’re reading this very article using technology).So, here we take a look at 5 ETFs leveraged to the technology trend.
The technology landscape
Technology companies generally either supply software or hardware, or servicesrelated to them. Hardware is physical, things like your computer, phone orother device. Software is code installed on the hardware to run programs orapps.Technology companies operate in a broad range of new and existing sectors. Thetechnology industry is vast, encompassing everything from device manufactureto augmented reality. Things that weren’t previously within the technologyspace are becoming so as the internet of things becomes a reality.By one estimate, “the digital economy is worth $11.5 trillion globally,equivalent to 15.5 percent of global GDP, and has grown two and a half timesfaster than global GDP over the last 15 years.”Technological advancement seems to occur at an exponential rate thanks toMoore’s law, which states that computers and the information technologies thatuse them double their capabilities every 12–18 months.Cybersecurity is becoming an increasing concern as more data is available inmore places. Large organisations are gathering increasing amounts of personalinformation about their customers in order to gain consumer insights. At thesame time, initiatives like Open Banking are attempting to give customers somecontrol over how their data is used.Increased regulation around data security and usage necessitates increasedresourcing of data protection and management. As the source of data,businesses become prime targets for cyber-attacks. The global cybersecuritymarket is forecast to grow to US$248 billion by 2023.
Technology and ETFs
Exchange traded funds (ETFs) providing sector specific access to technologyshares are available to trade on the ASX. ETFs are traded just like ordinaryshares. ETFs, however, provide exposure to a basket of underlying securities.Holding multiple securities means ETFs come with a measure of inbuiltdiversification. Diversification lowers unsystematic risk, reducing thevolatility of portfolio returns.Sector specific ETFs, such as technology ETFs hold a range of shares withinthe technology sector. They are diversified within the sector, but not outsidethe sector.Here are 5 ETFs designed specifically for technology investors.
The Betashares NASDAQ 100 ETF (ASX: NDQ) provides exposure to the 100 largestnon-financial securities listed on the NASDAQ stock market, by marketcapitalisation.The ETF tracks the performance of the NASDAQ-100 Index, before fees andexpenses. The fund returned 19.90% in the year to 31 October. Management costsare 0.48% per annum and distributions are made twice yearly.Top holdings include Apple (12.1%), Microsoft (11.6%), Amazon.com (9.0%),Alphabet (8.6%) Facebook (4.9%), Intel (2.9%), Comcast (2.2%), and CiscoSystems.
ETFS Morningstar Global Technology ETF (ASX: TECH) offers focused exposure tothe global technology sector. The ETF tracks the Morningstar Developed MarketsTechnology Moat Focused Index which is composed of equally weighted marketleaders that have a competitive advantage over others in the same field.Returns were 26.45% in the year to 31 October. Management fees are 0.45% perannum and distributions are made twice yearly. Holdings are distributed acrossthe United States (89.6%), Australia (5.8%), Japan (2.4%), and Germany (2.2%).Top holdings include Arrow Electronics (4.17%), Alphabet Class A (4.13%), PaloAlto Networks (4.12%), Guidewire Software (4.10%), Microsoft (4.06%),Microchip Technology (3.98%), Broadcom (3.94%), Sabre Corp (3.93%), FacebookClass A (3.88%), and Salesforce.com (3.83%).
The Betashares Global Cybersecurity ETF (ASX: HACK) provides exposure toleading companies in the cybersecurity sector. The ETF tracks the NasdaqConsumer Technology Association Cybersecurity Index.Returns were 17.79% in the year to 31 October. Management fees are 0.67% anddistributions are made twice yearly. Holdings are distributed across theUnited States (82.5%), Israel (6.0%), Britain (5.6%), Japan (3.0%), France(2.5%), South Korea (0.3%), and elsewhere (0.1%).Top holdings include Broadcom (6.2%), Palo Alto Networks (6.2%), VMWare(6.1%), Okta Inc (5.7%), Cisco Systems (5.4%), Fortinet Inc (3.7%), Splunk(3.7%), Fireeye Inc (3.5%), and F5 Networks (3.2%).
The Betashares Asia Technology Tigers ETF (ASX: ASIA) provides exposure to 50of the most innovative and disruptive technology companies in Asia. This canbe used to complement existing US based technology allocations. The ETF tracksthe Solactive Asia Ex-Japan Technology & Internet Tigers Index.Returns in the year to 31 October were 21.07%. Management costs are 0.67% perannum and distributions are made annually. Holdings were distributed acrossChina (45.7%), Taiwan (23.5%), South Korea (20.9%), India (8.0%), Thailand(1.0%), and elsewhere (0.9%).Top holdings included Alibaba (11%), Taiwan Semiconductor Manufacturing(9.9%), Tencent Holdings (9.5%), Samsung Electronics (9.5%), Meituan Dianping(7.0%), Infosys (4.9%), Netease Inc (4.6%), SK Hynix Inc (4.5%) and JD.com(4.3%).
Robotics and AI
The ETF Securities Global Robotics and Automation ETF (ASX: ROBO) tracks theROBO Global Robotics and Automation Index. The Index is made up of shares incompanies in the global value chain of robotics, automation, and artificialintelligence.Returns were 23.74% in the year to 31 October. Management fees are 0.69% perannum and distributions are made annually. Holdings are distributed across theUnited States (44.2%), Japan (22.4%), Germany (9.1%), Taiwan (5.7%),Switzerland (3.4%), United Kingdom (3.3%), China (2.3%), Sweden (2.1%), France(2.0%), South Korea (1.7%) and elsewhere.Top holdings include Brooks Automation (1.84%), Zebra Technologies (1.75%),Krones AG (1.71%), Nvidia Corp (1.68%), Koh Young Technology (1.67%), FanucCorp (1.66%), Intuitive Surgical (1.63%), Congnex Corp (1.63%) and Daifuku CoLtd (1.62%).
These ETFs provide instant access to a variety of global technology firms.Whether you are looking to increase you technology exposure or just diversifyyour portfolio, these ETFs will help you ride the tech train.