ASX-listed exchange-traded funds (ETFs) are focused on growing sectors that could deliver solid capital growth based on the tailwinds they're exposed to.
In this article, I'm going to talk about businesses from two sectors, cybersecurity and video gaming, that I like the revenue growth outlook for.
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Betashares Global Cybersecurity ETF (ASX: HACK)
This ASX ETF is invested in 32 businesses that provide roles and services in the cybersecurity industry.
Some of its biggest holdings include Broadcom, Crowdstrike, Palo Alto Networks, Infosys and Okta.
Cybersecurity is a very important service – there are so many transactions and valuable data on the internet. Online banking, online shopping, connecting with government services, important emails and so on.
The Australian Signals Directorate (ASD) 2023 annual cyber threat report showed that the average cost of cybercrime per report increased by 14%, the number of cybercrime reports rose by 23% and there were 33,000 calls to the Australian Cyber Security hotline, up 32%. There have been a number of Australian businesses that have been hit by cyber attacks including Medibank Private Ltd (ASX: MPL) and Optus.
The good guys need to continually up their game, and they're getting paid more for it. According to Statista research, the global cybersecurity market amounted to US$223.7 billion in 2022, it's projected to reach US$345.4 billion in 2026 and US$478.7 billion in 2030. If revenue does keep rising, it could help the underlying businesses continue to perform for shareholders.
Between inception in August 2016 and the end of December 2023, this ASX ETF has delivered an average return per annum of 17%. But, past performance is not a guarantee of good returns.
VanEck Video Gaming and Esports ETF (ASX: ESPO)
This ETF is invested in businesses that make a large portion of their revenue from the gaming sector.
Readers may recognise some of the largest positions in the portfolio like Nvidia, Nintendo, Tencent, Electronic Arts, Take-Two Interactive Software and Bandai Namco.
According to VanEck, Newzoo research says the competitive video gaming audience was expected to reach 646 million people globally in 2023, driven partly by a rising population of digital natives. E-sports revenue has grown by an average of 28% per year since 2015, while video gaming achieved 12% average annual growth since 2015.
One of the benefits of e-sports growth is creating new potential revenue streams from game publisher fees, media rights, merchandise, ticket sales and advertising.
It had a total of 25 holdings as at 24 January 2024, which shows a decent amount of diversification, and an appealing allocation to the bigger businesses.
