There are some great ASX exchange-traded funds (ETFs) for investors to pick up on the Australian Stock Exchange. Certainly, I think there's space in a portfolio for growth-focused ETFs that give exposure to niche areas of the global economy.
With that in mind, I'm going to outline two ASX ETFs that are very interesting to me and could be good options to diversify a portfolio.
VanEck Video Gaming and Esports ETF (ASX: ESPO)
This ETF gives investors access to the global video gaming and e-sports market.
It's invested in some of the world's largest players in the sector, including Nvidia, Tencent, Advanced Micro Devices, Activision Blizzard, Nintendo, Electronic Arts, Bandai Namco, and Take-Two Interactive Software.
The e-sports sector is creating new potential revenue streams for the companies involved, including game publisher fees, media rights, merchandise, ticket sales, and advertising.
VanEck says e-sports revenue growth has increased on average by 28% per year since 2015, while overall video gaming revenue has increased by 12% per annum.
VanEck said:
E-sports reflect[s] the convergence of entertainment, video gaming, sports and media businesses. With an active, engaged and relatively young demographic, the stage is set for sustainable long-term growth.
The ETF had 25 holdings on 2 June 2023 so it doesn't exactly offer huge diversification, but it's much more diverse than owning just one or two names.
The index this ASX ETF tracks has returned an average 15.6% per annum over the past five years. However, the next five years could be quite volatile.
Betashares Global Cybersecurity ETF (ASX: HACK)
This fund invests in the current and future leaders of the global cybersecurity world.
While almost 80% of the portfolio is invested in US businesses, there are a few other countries that have a weighting of at least 3.3%, namely India, Israel, Canada, and France.
We've seen the dangers of cyber attacks with high-profile hacks hitting Medibank Private Limited (ASX: MPL), Optus, and Latitude Group Holdings Ltd (ASX: LFS).
According to research cited by BetaShares, the global cybersecurity market was US$137.6 billion in 2017. It had grown to US$223.7 million in 2022 and by 2030, it could reach US$478.7 million.
Businesses and governments are keen to avoid costly and dangerous cyber infiltration in this increasingly digital world, so it wouldn't surprise me to see cyber businesses continue to grow quickly. This would certainly help this ASX ETF.
Over the past five years, the HACKE ETF has returned an average of around 12.5%. Although past performance is not a reliable indicator of future performance, I think this ETF is demonstrating excellent growth credentials over the longer term.
