I believe that exchange-traded funds (ETFs) can be a very effective way to invest in ASX shares and global shares. After the recent volatility, I think there are some opportunities.
In theory, higher interest rates do act as a headwind for asset prices.
However, with some ETFs noticeably down, I think it's worth noting that the underlying businesses in those ETFs are still operating, generating revenue, and aiming to grow for the long term.
The lower prices we're now seeing with some of these businesses and ETFs look like opportunities to me. That's why I think these two investments are attractive:
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
This ETF aims to give investors access to a portfolio of large businesses across the world that are "climate leaders", according to BetaShares, which have passed screens that exclude businesses with significant exposure to fossil fuels or are "engaged in activities deemed inconsistent with responsible investment considerations".
Some of the screens include avoiding businesses that are significantly engaged in weapons, gambling, alcohol, junk food, and more. The ETF also isn't invested in businesses that have human rights or supply chain concerns, as well as ones that lack gender diversity.
The ETF owns 200 of the largest global businesses that pass all those screens. These are some of the companies in the portfolio, which each have a weighting of at least 2%: Nvidia, Apple, Visa, Home Depot, Mastercard, Toyota, UnitedHealth, ASML, Adobe, and Cisco Systems.
I think this ETF's net returns have shown that 'ethical' businesses can perform just as well, if not better, as ones that don't pass the ethical screens. Keeping in mind that past performance is not a guarantee of future performance, in the five years to April 2022 the ETF has returned an average of around 17% per annum.
In my opinion, this ETF can provide exposure to quality businesses that can perform well and also act ethically. It looks more attractively valued after a 20% fall in 2022.
BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)
This ETF is invested in the ASX tech share space. The S&P/ASX 200 Index (ASX: XJO) is heavily focused on financial and resource names. But, technology can be a sector that generates more revenue growth than others.
I think that the tech sector looks much better value after the heavy falls in 2022. The ATEC ETF has dropped 30% in 2022 at the time of writing.
There are currently 72 names in the ETF's portfolio, with many of the biggest names being highly profitable.
These are the biggest 10 positions: Computershare Limited (ASX: CPU), Xero Limited (ASX: XRO), Seek Limited (ASX: SEK), Block Inc (ASX: SQ2), WiseTech Global Ltd (ASX: WTC), REA Group Limited (ASX: REA), Carsales.com Ltd (ASX: CAR), Nextdc Ltd (ASX: NXT), Altium Limited (ASX: ALU), and TechnologyOne Ltd (ASX: TNE).
While I wouldn't necessarily buy every ASX tech share in the ATEC ETF portfolio for my own portfolio, I think the much lower price means the ETF is noticeably more attractive considering the structural shift towards technology over the long term.
