2 ASX ETFs with strong growth potential

There are some wonderful ETFs to consider for the long-term.

| More on:
the words exchange traded fund with a zig zag arrow pointing up

Image source: Getty Images

Key points

  • ETFs can be an effective way to invest for the long-term
  • One ETF with underlying growth is one from VanEck which focuses on the global video gaming and e-sports sector
  • The NASDAQ 100 ETF from BetaShares is another investment that has a lot of holdings that are growing

On the ASX there are some high-quality exchange-traded funds (ETFs) that look like they’re capable of producing attractive long-term returns.

Businesses which are growing revenue at an attractive rate and are growing profit margins give themselves a good chance of producing bottom line growth that investors like.

Whilst some ETFs predominately own businesses that aren’t generating much long-term compound earnings growth, others have holdings that are making a lot of progress:

VanEck Video Gaming and Esports ETF (ASX: ESPO)

This ETF is all about the global video gaming and e-sports sector. It has seen its price fall by more than 13% over the last two months. This may be a chance for investors to look at the ETF when it’s at a cheaper level.

There is a lot of consumer demand for video games and e-sports. This demand has been growing for a long time. Since 2015, e-sports revenue has grown by an average of 28% per year according to the Newzoo Global Esports Market Report.

The competitive video gaming audience is expected to reach 646 million people globally in 2023. E-sports reflects the convergence of entertainment, video gaming, sports and media businesses.

VanEck says that with an active, engaged and relatively young demographic, the stage is set for sustainable long-term growth. The average age of e-sports enthusiasts is under 30.

The Asia-Pacific region was forecast to generate game revenue of US$78.4 billion in 2020, accounting for 49% of the global games market.

There are a number of high profile businesses in this portfolio, including Tencent, Nvidia, Advanced Micro Devices, Nintendo, Activision Blizzard, Sea, Netease, Electronic Arts, Take-Two Interactive Software and Bandai Namco.

However, Microsoft just announced that it wants to buy Activision Blizzard.

Betashares Nasdaq 100 ETF (ASX: NDQ)

This ETF has many of the leading American businesses in the portfolio. It’s made up of 100 of the biggest companies on NASDAQ.

Many of the world’s fastest-growing blue chips are in this portfolio – Apple, Microsoft, Amazon, Facebook/Meta, Tesla, Nvidia, Alphabet and so on.

The reason why the Betashares Nasdaq 100 ETF has managed to do so well over the past five years, with net returns of 27.7% per annum to 31 December 2021, is because the underlying businesses have performed so well. Many have introduced new products and services, growing their earnings and addressable markets.

But it’s not just the biggest tech companies that are generating performance. Plenty of others are generating growth too including Netflix, Costco, PayPal, Qualcomm, Texas Instruments, Advanced Micro Devices, Intuitive Surgical, Moderna and so on.

As BetaShares says, in one trade on the ASX we can get access to companies like Apple, Amazon and Google, that have changed the way we live. Technology is a sector that is typically higher-growth but also under-represented on the ASX. This option gives us the ability to get exposure to great tech companies.

The ETF has an annual management fee of 0.48%. It has done very well in recent years, but past performance is no guarantee of future performance.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia owns and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors ETF Trust - VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ETFs

Four ASX dividend shares investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces wondering what the APA share price will do today and how big the APA dividend yield will be in 2022

Is it a good time to buy the Vanguard Australian Shares Index ETF?

This exchange-traded fund is an interesting investment proposition in the current environment.

Read more »

the words ETF in red with rising block chart and arrow

2 high quality ETFs for ASX investors to buy

Here are two ETFs to look at this month...

Read more »

ETF on white blocks with a rising arrow on top of coin piles.

Here’s why this ASX ETF is leaping 13% to a new 52-week high today

This ASX ETF is rocketing today. Here's how it is managing to defy the broader market.

Read more »

Concept image of US dollar in front of a graphic showing shares and a downward arrow representing the VTS ETF

Vanguard US Total Market Shares Index ETF tumbles following Wall Street sell-off

This Vanguard ETF is feeling the pain today. Here's why...

Read more »

ETF written in yellow with a yellow underline and the full word spelt out in white underneath.

3 top ETFs for ASX investors to buy now

Here are three top ETFs to buy this week...

Read more »

Four ASX dividend shares investors stand in a line holding cash fanned in their hands with thoughtful looks on their faces wondering what the APA share price will do today and how big the APA dividend yield will be in 2022

Does the ETFS Battery Tech & Lithium ETF (ACDC) pay dividends?

We take a closer look at this exchange-traded fund...

Read more »

A rugby player with head strapped and ball tucked under one arm raises his other hand in a fend while making an aggressive, grimace face as if to fight off defenders.

Here are 2 ASX-listed ETFs that might be able to fend off inflation

Could these ETFs be a way to combat inflation in a portfolio?

Read more »

One boy is triumphant while the other holds his head in his hands after a game of chess.

VGS: Were you better off buying the S&P 500 ETF?

IVV and VGS are both popular international ETFs. But which one wins?

Read more »