Exchange-traded funds (ETFs) have the ability to give us exposure to a large group of businesses from a particular location or sector. Some ETFs have delivered a lot of growth.
Here are two that have outperformed the S&P/ASX 200 Index (ASX: XJO) over the past few years.
Betashares Asia Technology Tigers ETF (ASX: ASIA)
The US isn't the only place to find technology giants with big addressable markets.
This ETF is about giving investors exposure to the 50 largest Asian technology companies outside of Japan through a single investment.
BetaShares says that due to its younger, tech-savvy population, Asia is surpassing the West in terms of technological adoption and the sector is anticipated to remain a growth sector. The ETF provider also says that technology is under-represented in the Australian share market and it can complement investors' US tech exposure.
You may be wondering about some of the Asian tech giants that make up this ETF's portfolio holdings. The biggest five positions are: Taiwan Semiconductor Manufacturing, Samsung Electronics, Meituan, Tencent and Alibaba. These positions alone account for 47.5% of the portfolio. The next five are: Pinduoduo, JD.com, Netease, Sea and Infosys.
In terms of geographical diversification, just over half of the portfolio is made up of Chinese businesses. There's another 20.7% based in Taiwan, 19.2% from South Korea and 5.1% from India.
It has an annual management fee of 0.67% per annum. Whilst that's higher than many other index-based ETFs, it hasn't harmed the returns too much. At 29 January 2021, it had produced a net return of 71.5% over the last year and an average return per annum of 37.2% since inception in September 2018.
Betashares Global Cybersecurity ETF (ASX: HACK)
This is another ETF provided by BetaShares. With this one, it provides a focus on a particular industry: cybersecurity.
There have been plenty of high profile cyber attacks over the past decade. BetaShares says that with cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future.
At the moment there are around 40 positions in the portfolio, represented by both global giants and smaller niche emerging players.
Its biggest holdings include: Crowdstrike, Zscaler, Cisco Systems, Accenture, Splunk, Fireeye, Palo Alto Networks, Proofpoint, Fortinet and Sailpoint Technologies.
Whilst over half of the Betashares Global Cybersecurity ETF portfolio is classified as 'systems software', there are other categories like IT consulting and other services, communications equipment, internet services and infrastructure, application software and aerospace and defence.
Almost 90% of the portfolio is invested in businesses listed in the US, though many of them generate earnings from multiple countries. Other countries with a weighting in the portfolio of more than 1% include the UK, Israel, Japan and France.
This ETF also has an annual management fee of 0.67% per annum. Its net returns have also been better than the ASX in recent years. Over the last year the net return from Betashares Global Cybersecurity ETF was 25.2%, over the last three years the ETF has made an average return per annum of 25.1% and since inception in August 2016 the ETF has made average returns per annum of 20.9%.
