There are certain ASX exchange-traded funds (ETFs) that can give us exposure to compelling growth trends. If revenue is growing for these businesses, then that will hopefully translate into rising profits and good shareholder returns.
Sometimes it's hard to know exactly which particular business is going to benefit from growth in demand for a type of product or service. So, buying a whole group of companies at the same time through an ETF could make sense, also getting diversification at the same time. That's why I like these two ASX ETFs:
Image source: Getty Images
VanEck Video Gaming and Esports ETF (ASX: ESPO)
The concept of this investment is that it's invested in some of the world's largest and leading businesses involved in the global video gaming and e-sports sector.
These are some of the largest holdings, which some readers may recognise: Nvidia, Tencent, Advanced Micro Devices, Nintendo, Activision Blizzard, Sea, Netease, Bandai Namco, Electronic Arts, and Take-Two Interactive Software. At the moment, it has 25 holdings.
VanEck says video gaming has achieved average annual revenue growth of 12% since 2015, while e-sports has seen annual average revenue growth of 28% since 2015.
E-sports on the beste casino's is creating lots of new revenue streams, including game publisher fees, media rights, merchandise, ticket sales, and advertising. The competitive video gaming audience is expected to reach around 650 million people in 2023, according to Newzoo.
Over the five years to 30 April 2023, the index this ASX ETF tracks achieved an average return per annum of 15.7%. Although past performance is not a guarantee of future returns.
Betashares Global Cybersecurity ETF (ASX: HACK)
This ETF is invested in a range of cybersecurity businesses around the world.
We're talking about names like Fortinet, Broadcom, Palo Alto Networks, Cisco Systems, Infosys, Verisign, Open Text, and Akamai Technologies.
Unfortunately, Australia presents a good example of the growth in cybercrime, and why cybersecurity is an important and growing industry. There have been a number of high profile cyber attacks in Australia in recent times, including major hacks on Medibank Private Limited (ASX: MPL), Optus and Latitude Group Holdings Ltd (ASX: LFS).
The Australian Cyber Security Centre (ACSC) said in its 2022 report that the number of cybercrime reports increased by around 13% year over year. There was also an average increase in the cost per cybercrime.
Certainly, individuals, businesses, and governments are increasingly moving online, making it more important that they have highly effective cybersecurity.
According to Statista, the global cybersecurity market could be worth $248 billion in 2023 and rise to $479 billion by 2030. That's a strong tailwind for the businesses involved in this ASX ETF, if they do keep growing. I think this could enable the industry to keep seeing good share price growth.
Since its inception in August 2016, the ETF has achieved an average return per annum of around 14.3%. Although, once again, past performance is not a guarantee of future returns.
