If you're wanting to invest in the tech sector for diversification, then exchange traded funds (ETFs) could help you achieve this.
But which ETFs should you look at? Here are two popular ETFs that could be worth considering:
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BetaShares Asia Technology Tigers ETF (ASX: ASIA)
The first tech ETF to look at is the BetaShares Asia Technology Tigers ETF. It gives investors exposure to ~50 of the largest technology and ecommerce companies that have their main area of business in Asia.
These companies, known as Tigers, include well-known players such as Alibaba, Baidu, Infosys, JD.com, Samsung, and Tencent Holdings. In addition, while they may be lesser known than the others, the likes of Kuaishou Technology, Meituan Dianping, and Pinduoduo are certainly not tiger cubs. These are companies that make many Australian tech companies look miniscule.
Pinduoduo, for example, is a US$68 billion e-commerce platform that offers a wide range of products from daily groceries to home appliances. The Pinduoduo platform connects distributors with consumers directly through an interactive shopping experience. This allows shoppers to team up to buy items in bulk at lower prices. It has an active customer base closing in on 1 billion.
It is worth highlighting that regulatory concerns in China have been weighing on the ETF. Though, this is being seen by many as a buying opportunity.
GFM Asset Management's Tariq Dennison recently told CNBC: "If you ask me, newer regulations are more likely to entrench these companies and to give them wider moats because Tencent is very, very likely to be able to adapt to any of these new rules, to find new ways to make money. And they have lots and lots of consumers to serve in a common prosperity model."
VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)
Another tech ETF to consider is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors exposure to many of the largest companies involved in video game development, eSports, and gaming related hardware and software.
Among the companies you'll be owning are game developers Activision Blizzard, Roblox, Take-Two, and Electronic Arts, and graphics processing unit (GPU) developer Nvidia. VanEck notes that the increasing popularity of video games and eSports means that these companies are well-placed to benefit.
One of the companies in the fund is Roblox. It is the game developer behind the eponymous Roblox online metaverse platform and game creation system. It has 50 million daily active users, which are generating significant recurring revenues for the company.
