The technology sector could be the best place to find shares to provide outperformance for your portfolio. But it can be hard to know what tech share to buy, so perhaps a technology exchange-traded fund (ETF) could be the best way to do things.
Buying an ETF allows us to buy a large group of shares, usually tracking an index, for diversification.
Here are two options to consider:
BetaShares NASDAQ 100 ETF (ASX: NDQ)
Although the NASDAQ isn’t officially a ‘tech’ exchange, it’s where most of the best US tech shares are located.
The ASX simply doesn’t have the large and fast-growing blue chip tech businesses that the NASDAQ has.
With this ETF you get exposure to shares like Microsoft, Apple, Amazon, Facebook and Alphabet. Around 45% of the ETF is allocated to just these five shares. Then there’s other tech shares like Intel, Cisco, Adobe, Netflix, PayPal, Broadcom, Nvidia and so on.
Despite the (quite reasonable) management fee of 0.48%, this ETF has delivered an average return of 22.25% per annum over the past three years.
As long as the FAANG businesses aren’t broken up then this ETF could keep growing strongly over the next decade.
BetaShares Asia Technology Tigers ETF (ASX: ASIA)
The US isn’t the only place where there’s powerful tech shares. Asia is a fast-growing region with a middle class (and affluent class) which are rapidly gaining wealth.
Cloud computing, eCommerce, smartphones, gaming, music, logistics and so on are represented strongly in this ETF.
Some of the biggest holdings are Taiwan Semiconductor Manufacturing, Samsung, Alibaba, Tencent and Infosys. These businesses all have very promising medium-to-long-term futures.
The trade war is having a bit of a tough time on the share prices of Asian businesses, particularly Chinese ones. The Hong Kong protests aren’t helping share prices either.
It’s hard to say which one is better value at the moment. The Asian ETF is definitely better value and perhaps the underlying businesses may grow earnings faster. But China offers risks and uncertainties, so the NASDAQ ETF could be a safer idea but still strong.
But if you’re individual shares with strong growth prospects then these top ASX stocks could be the best candidates.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS and BetaShares Asia Technology Tigers ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.