ASX ETFs offer diversification in one simple trade.
Investing in hundreds or even thousands of companies at once can help smooth out market volatility.
However with the rise of thematic ETFs, even successful funds can be exposed to market dips.
The following three funds have had a successful track record of returns, but underperformed last year relative to historic performance.
This could make them attractive investment options at current prices.
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Etfs Morningstar Global Technology ETF (ASX: TECH)
This ASX ETF targets companies positioned to benefit from the increased adoption of technology, including companies whose principal business is in offering computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), and/or cloud and edge computing infrastructure and hardware.
Since its inception in 2017, the fund has risen more than 100%.
This includes almost 8% p.a. returns over the last 5 years.
This hasn't come without years of volatility.
It is down 10% over the last 12 months.
With that in mind, this fund has exposure to sectors that are paramount to the growth of technology and cloud computing.
These include semiconductors, software and electronics.
At the time of writing, it includes 38 underlying holdings, with its largest geographical exposure being to:
- United States (60.76%)
- Netherlands (8.90%)
- Germany (6.65%)
Betashares India Quality ETF (ASX: IIND)
Another thematic fund with a good track record, but a down year is the Betashares India Quality ETF.
As the name suggests, it targets high quality Indian companies.
According to Betashares, it includes 30 high quality Indian companies based on a combined ranking of the following key factors: high profitability, low leverage and high earnings stability.
The thematic nature of this fund means it relies on the performance of the Indian economy.
However despite falling more than 5% over the last year, its long-term prospects are intriguing.
India's economy is one of the fastest-growing in the world, with future growth potential underpinned by strong structural fundamentals.
India is expected to remain among the best performing economies globally; the IMF forecasts GDP to expand 6.4% p.a. in the next year.
Furthermore, this fund has actually already shown a strong track record.
It has risen 60% since March 2020.
iShares International Equity ETFs – iShares S&P Small-Cap ETF (ASX: IJR)
As the name suggests, this fund focuses on small-cap US stocks.
According to iShares, it tracks the performance of the S&P Small-Cap 600, before fees and expenses. The index is designed to measure the performance of small-capitalisation US equities.
In the last 12 months it only rose 1%.
However it has an average annual return of 10% over the last 5 years.
