Exchange-traded funds (ETFs) could be a smart place to look for opportunities in April 2022.
Some ETFs may be capable of providing a mixture of growth and diversification thanks to tailwinds.
There has been a lot of volatility in the last few months. Here are two ETFs to consider:
Image source: Getty Images
Betashares Global Cybersecurity ETF (ASX: HACK)
As the name suggests, this ETF is about the global cybersecurity sector.
One of the businesses owned in this ETF's portfolio, Palo Alto, commented last year about 'ransomware'. Its 2021 update said that "the average ransomware payment climbed 82% since 2020 to a record $570,000 in the first half of 2021, as cybercriminals employed increasingly aggressive tactics to coerce organizations into paying larger ransoms".
That increase came after a 171% increase in the previous year to $312,000.
Palo Alto also said:
While we predict that ransoms will continue their upward trajectory, we do expect to see some gangs continue to focus on the low end of the market, regularly targeting small businesses that lack resources to invest heavily in cybersecurity.
Because of that, it's expected that spending on cybersecurity will increase to US$248.26 billion in 2023, according to BetaShares sources.
There are a total of 41 positions in the portfolio. The largest are: Crowdstrike, Palo Alto, Cloudflare, Cisco Systems, Zscaler, Akamai Technologies, Mandiant, Splunk, Booz Allen Hamilton, and Leidos.
The Betashares Global Cybersecurity ETF has an annual management fee of 0.67%.
Past performance is not a reliable indicator of future performance, but the HACK ETF delivered an average return per annum of 20.5% over the five years to 28 February 2022.
VanEck Video Gaming and Esports ETF (ASX: ESPO)
This is another ETF with a portfolio of international holdings that are leaders in their industry.
Investors get exposure to the video gaming and e-sports sector with this investment.
Readers may know some of the top ten businesses in this portfolio (out of a total of 25): Nvidia, Tencent, Advanced Micro Devices, Activision Blizzard, Nintendo, Netease, Sea, Unity Software, Electronic Arts, and Nexon.
ESPO has a relatively low weighting to the US of 44.5% for an internationally-focused ETF. Japan and China have weightings of 21.1% and 16.5%, respectively. Singapore, South Korea, Sweden, France, Taiwan, and Poland are the other locations that have an allocation.
VanEck says that the video game business is now larger than both the movie and music industries combined, making it a significant industry in entertainment.
E-sports is reportedly considered the world's fastest-growing sport. Revenue in the e-sports industry has increased by an average of 28% per year since 2015. It opens up new revenue avenues such as game publisher fees, media rights, merchandise, ticket sales, and advertising.
Outside of e-sports, the wider video gaming industry has seen 12% average annual growth since 2015.
VanEck said:
E-sports and online video games are a long-term disruptive force in the traditional media, entertainment and technology industries.
