The BetaShares Australia 200 ETF (ASX: A200) is one of the most popular exchange-traded funds (ETFs) out there, with net assets of $6 billion. However, some Aussies may be overexposed to the ASX share market.
Australia is a great country. But, the ASX share market only accounts for a small part, around 2%, of the global stock market.
There are some impressive ASX companies, such as CSL Ltd (ASX: CSL), Wesfarmers Ltd (ASX: WES), Goodman Group (ASX: GMG), WiseTech Global Ltd (ASX: WTC), and Xero Ltd (ASX: XRO).
However, the ASX share market is largely weighted to two industries: ASX financial shares and ASX mining shares. Looking at the A200 ETF portfolio, financials currently make up 33% of the portfolio, and miners account for 19.3% of the portfolio.
With that much industry concentration within the A200 ETF fund and limited global earnings generation by the average ASX company, I think it could be a good idea to look for international diversification.
Usually, I'd discuss options like the Vanguard MSCI Index International Shares ETF (ASX: VGS) and the Betashares Global Quality Leaders ETF (ASX: QLTY), but today, I'm going to focus on two other compelling ASX ETFs that give exposure to specific themes.
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Betashares Global Cybersecurity ETF (ASX: HACK)
Some sectors can give investors exposure to strong growth tailwinds.
I think cybersecurity is one of the best areas to invest in because of how integral it is for businesses, governments, and households to utilise it.
I believe that even if a global recession were to occur, cybersecurity would still be in strong demand because governments and businesses need to protect important data, log-in information, transaction details, intellectual property, and so on.
According to Statista, cybersecurity revenue is expected to show a compound annual growth rate (CAGR) of 7.9% between 2024 and 2029, resulting in a market volume of US$271.9 billion by 2029.
Due to the software nature of these businesses, the profit margins could increase in the coming years as more subscribers sign up.
The world is becoming more digital in numerous ways, such as e-commerce and banking. Globally, I think there is plenty of earnings growth for this group of businesses.
According to Betashares, the HACK ETF has returned an average return per year of 16.3% over the five years to August 2024. Of course, past performance is not a guarantee of future returns.
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
Some investors may want to avoid owning businesses from certain sectors that behave unethically.
While avoiding certain companies doesn't stop them from operating, owning ETHI ETF units can at least mean investors aren't profiting from the companies that don't match their ethics.
The ETHI ETF avoids a number of areas, including fossil fuels, gambling, tobacco, armaments and 'militarism', animal cruelty, and payday lending. It also avoids companies with human rights concerns and ones that lack board diversity.
It's invested in 200 large global businesses that pass all of those ethical screens. Those businesses are from a variety of countries including the US, Japan, the Netherlands, Denmark and the UK.
Some of the largest positions in the portfolio include Nvidia, Apple, Mastercard, Home Depot and Visa. Past performance is not a reliable indicator of future performance, but over the past five years the ETHI ETF has returned an average of 16.8% per annum.
