There are a few exchange-traded funds (ETFs) that are dropping through this tech-led share market sell-off.
Legendary investor Warren Buffett has a great quote about burgers, prices and shares. Gurufocus quoted my Buffett:
A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.
But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying.
With that in mind, these two ETFs are quite a bit lower than a month ago.
iShares S&P 500 ETF (ASX: IVV)
Warren Buffett himself is a big fan of S&P 500 funds because of the good long-term returns, diversification and the low management costs.
This one on the ASX is offered by Blackrock for an annual management fee cost of just 0.04% per annum.
Over the last month the iShares S&P 500 ETF has dropped by 4%.
The S&P 500 gives investors exposure to the FAANG shares of Facebook, Apple, Amazon, Netflix and Google (now called Alphabet).
There are also plenty of non-tech shares in the S&P 500 – there’s 500 names of course – but the biggest holdings include non-tech companies like Berkshire Hathaway, JPMorgan Chase, Johnson & Johnson, Walt Disney, United Health, Procter & Gamble, Bank of America, Home Depot and Exxon Mobil.
As you’re probably aware, the S&P 500 has performed strongly in recent years because of the strength of the American share market, particularly the tech sector. Over the last five years, the iShares S&P 500 ETF has delivered net returns of 14.70% per annum.
Betashares Asia Technology Tigers ETF (ASX: ASIA)
This ETF is about giving investors exposure to the 50 biggest technology businesses in Asia, outside of Japan.
Since 15 February 2021, the Betashares Asia Technology Tigers ETF has dropped around 14%.
It is full of Asia’s tech powerhouses including Samsung, Taiwan Semiconductor Manufacturing, Tencent, Meituan, Alibaba, JD.com, Pinduoduo, Infosys, Netease and Sea.
More than half of the portfolio is invested in businesses in China, but there are sizeable positions from countries like Taiwan, South Korea and India.
It has an annual management fee of 0.67% and the net returns have been stronger than the ASX in recent years. Over the last year the ETF’s net return has been 69.6% and its net return has been an average of 36.5% per annum since inception in September 2018.
BetaShares explains why this ETF is a very attractive growth opportunity with the following:
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.
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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 BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended iShares Trust - iShares Core S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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