There are a few ASX-listed exchange-traded funds (ETFs) that are benefiting from significant tailwinds, which is driving their profitability and shareholder returns.
While a tailwind doesn't automatically lead to earnings growth, there are some industries that are successfully executing on the opportunity.
Digital sectors are particularly appealing to me because it's easier for them to achieve higher profit margins and it's easier for them to expand.
With that in mind, below are two of the industry-focused ASX ETFs I like.
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Betashares Global Cybersecurity ETF (ASX: HACK)
This fund aims to give investors exposure to the leading companies in the global cybersecurity sector. It is invested in around 30 names that have a significant cybersecurity offering.
Some of its biggest holdings include Infosys, Palo Alto Networks, Broadcom, Thales, Okta and Zscaler.
BetaShares says that cybercrime is on the rise, so the demand for cybersecurity services is "expected to grow strongly for the foreseeable future".
There is a growing trend around the world of digitalisation, such as e-commerce, online banking, government services, and so on, which require protection from cyber criminals. In this light, I think the underlying holdings of the HACK ETF have both defensive earnings and a good profit growth outlook.
This ASX ETF has an annual management fee of 0.67%, and in the three years prior to February 2025, it produced an average return per year of 15.6%. Of course, past performance is not necessarily a reliable indicator of future returns.
VanEck Video Gaming and Esports ETF (ASX: ESPO)
The purpose of this fund is to give investors exposure to a portfolio of the largest companies involved in video game development, e-sports and related hardware and software.
VanEck says that these companies are positioned to benefit from the increasing popularity of video games and e-sports.
You may recognise some of the biggest businesses in the portfolio, including Tencent, Applovin, Nintendo, Take-Two Interactive, Electronic Arts, Capcom, Konami, Bandai Namco and Ubisoft.
According to reporting by Fortune Business Insights, the global e-sports market size was valued at US$560.6 million in 2024. This is expected to rise to US$649.4 million in 2025, and to US$2.07 billion by 2032 – this would represent a compound annual growth rate (CAGR) of 18% during that forecast period.
Pleasingly, e-sports can create a number of new potential revenue streams from game publisher fees, media rights, merchandise, ticket sales and advertising.
In the three years to February 2025, the ESPO ETF has returned an average of 21.5%. Again, past performance is not a reliable indicator of future returns.
