Here are 2 quality ETFs that are now a lot cheaper

These two ETFs have quality businesses, but their prices have fallen heavily.

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Key points

  • Both of these ETFs have seen declines of at least 20% in 2022
  • The ESPO ETF gives investors exposure to the global video gaming sector
  • The HACK ETF is about investing in the global cybersecurity market

There are some high-quality exchange-traded funds (ETFs) that have suffered significant sell-offs amid the current market volatility.

While a lower price may not automatically mean a business or investment is better value, it does allow investors to invest at a lower price.

The businesses in the below two ETFs are exposed to industry tailwinds:

VanEck Video Gaming and Esports ETF (ASX: ESPO)

As the name suggests, this ETF is all about the global video gaming and e-sports world.

For some specific names, these are the biggest 10 positions in the ESPO ETF’s portfolio: Tencent, Nvidia, Activision Blizzard, Netease, Nintendo, Advanced Micro Devices, Electronic Arts, Nexon, Bandai Namco, and Zynga.

There is a sizeable double-digit representation in the portfolio from the US, Japan, and China. So, there is a bit of global geographic diversification in the portfolio away from Australia.

The global video gaming industry has seen annualised double-digit revenue growth since 2015, with e-sports revenue growing even faster (which has risen by an average of 28% per annum since 2015).

E-sports is actually opening up a number of revenue streams with the large gaming audiences that it gets. Examples of those new sources of revenue include game publisher fees, media rights, merchandise, ticket sales, and advertising.

Video gaming is now such a large sector that it is bigger than the combined entertainment industries of music and movies.

The ETF has annual management fees of 0.55%.

How much cheaper is the ESPO ETF? It has dropped by 28% since the beginning of 2022.

Betashares Global Cybersecurity ETF (ASX: HACK)

This ETF’s name also gives a clear indication of its purpose. It’s about the global cybersecurity sector.

There are a total of around 40 positions in the HACK ETF portfolio. These are the biggest names in the ETF’s holdings: Cisco Systems, Palo Alto Networks, Crowdstrike, Zscaler, Mandiant, Booz Allen Hamilton, Leidos, Cloudflare, Sailpoint Technologies, and Akamai Technologies.

BetaShares says that with cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future. According to Statista, the global cybersecurity market is expected to rise from US$151.67 billion in 2018 to US$248.26 billion in 2023.

The fund provider notes that “Australian investors currently have few local options for gaining exposure to the fast-growing cybersecurity sector”. There are “very few pure-play cybersecurity firms listed on the Australian sharemarket”.

The HACK ETF comes with an annual management fee of 0.67%.

This investment has also seen a sizeable drop since the beginning of 2022, falling by 20%.

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. has positions in and has recommended Activision Blizzard, Advanced Micro Devices, BETA CYBER ETF UNITS, Cisco Systems, Cloudflare, Inc., CrowdStrike Holdings, Inc., Nvidia, and Zynga. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Electronic Arts and NetEase. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended Activision Blizzard, CrowdStrike Holdings, Inc., Nvidia, and 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 Scott Phillips.

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