Why I'd buy these 2 ASX ETFs right now

Here are two thematic exchange-traded funds I'd buy today.

| More on:
A happy family playing video games smiles and laughs together

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

I think exchange-traded funds (ETFs) are a fantastic way to build long-term wealth. Particularly low-cost, broad-based ETFs listed on the ASX.

These broad-based ETFs sit at the heart of my core portfolio. But I think thematic ETFs can play a part when it comes to satellite or tactical positions, which are riskier and form smaller parts of my portfolio.

While the space is getting crowded and some thematic ETFs seem particularly niche, there is a handful I have my eye on.

Here are two thematic ASX ETFs I'd buy today. In fact, one of them is already sitting in my portfolio.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Starting with the one I own, the BetaShares Global Cybersecurity ETF is a simple way to get exposure to the cybersecurity theme here on the ASX.

The cybersecurity industry has been growing in prominence for years. But it's now hurtling along a COVID-accelerated trajectory as things like cloud computing and remote working have come to the fore.

According to the Identity Theft Resource Center, the number of new data breaches set a new record in 2021, soaring 68% over the number of incidents seen in 2020.

Consulting firm Gartner forecasts that information security spending will reach US$187 billion in 2023, representing 11% growth.

As security budgets continue to rise and the world only becomes even more connected, cybersecurity will likely be a high-growth industry for years to come.

And like any high-growth industry, there'll be various winners and losers.

Rather than selecting which individual companies to invest in, this ETF provides investors with a basket of leading companies involved in cybersecurity.

The ETF has 38 holdings, the majority of which are listed in the United States. Right now, the top holdings include Crowdstrike Holdings Inc (NASDAQ: CRWD), Cloudflare Inc (NYSE: NET), and Cisco Systems Inc (NASDAQ: CSCO).

These companies operate across the spectrum of cybersecurity, from virus protection and intrusion detection to computer networking equipment, identity management, content delivery networks, and more.

As a growth-focused ETF, the year hasn't been particularly kind. Over the past 12 months, the ETF is printing an 11.4% fall (including dividends). But over the last three years, it has delivered an average return of 14.9%.

It's worth noting that as a thematic ETF, its management fee comes in on the higher side at 0.67%.

VanEck Video Gaming and Esports ETF (ASX: ESPO)

As its name suggests, this VanEck ETF provides investors with exposure to the video gaming and esports thematic.

After once being stereotyped as being isolating and unsociable, gaming has levelled up. And it's an industry that's becoming increasingly hard to ignore, especially in the attention economy we live in.

Last year, the number of gamers worldwide surpassed three billion. And the audience for live-streamed gaming content continued to grow, with 747 million people tuning in to watch their favourite gamers on platforms like Twitch and YouTube.

According to research firm Newzoo, the global games market generated revenue of US$181 billion in 2021. It's tipping this figure to reach US$218.8 billion in 2024.

Meanwhile, esports continues to take on a life of its own. Last year's League of Legends World Championship racked up more than one billion total hours of viewership. And the finals series garnered a peak audience of 73 million people.

The ETF comprises 25 holdings and aims to track an index that includes the largest and most liquid companies that generate at least 50% of their revenue from video gaming and/or esports.

As it stands, the ETF has key weightings to the US (42%), Japan (22%), and China (16%).

The top holdings include chip company NVIDIA Corporation (NASDAQ: NVDA), Call of Duty publisher Activision Blizzard Inc (NASDAQ: ATVI), and Chinese conglomerate Tencent Holdings Ltd (HKG: 0700).

The ETF has tumbled 27.6% over the last 12 months as many of its top holdings have been smashed, showing the downsides of being a rather concentrated ETF. But zooming out, the index that this ETF tracks has delivered an average annual return of 16.1% across the last three years.

At 0.55%, the ETF attracts lower management fees than the BetaShares Global Cybersecurity ETF.

Motley Fool contributor Cathryn Goh has positions in BETA CYBER ETF UNITS, Cloudflare, Inc., and CrowdStrike Holdings, Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Activision Blizzard, BETA CYBER ETF UNITS, Cisco Systems, Cloudflare, Inc., CrowdStrike Holdings, Inc., Nvidia, and Tencent Holdings. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended Activision Blizzard, CrowdStrike Holdings, Inc., Nvidia, and VanEck Vectors ETF Trust - VanEck Vectors Video Gaming and eSports ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

tick, approval, business person with device and tick of approval in background
ETFs

Why this could become my favourite ASX ETF to buy

This ASX ETF ticks all my boxes.

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
ETFs

The best ASX ETFs to ride the AI and tech megatrends

Let's see what these exciting funds are invested in.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
ETFs

BetaShares ETF provider to expand into private credit. Should you be interested?

Private credit could be coming to the ASX.

Read more »

Stethoscope on Euro notes.
ETFs

Why it could be time to buy European-focused ASX ETFs

Eight of the world’s 10 best-performing stock markets in 2025 are in Europe.

Read more »

Alarm clock sitting on table next to man typing on laptop
ETFs

Buy and hold these ASX ETFs for the next decade

These funds could be strong picks for investors looking to make long term investments.

Read more »

ETF written in yellow with a yellow underline and the full word spelt out in white underneath.
ETFs

3 fantastic ASX ETFs to buy with $1,000 this month

Looking for ETFs to buy? Check out these options.

Read more »

A large transparent piggy bank contains many little pink piggy banks, indicating diversity in a share portfolio.
ETFs

How many ASX ETFs should I have in my portfolio?

Let's take a look.

Read more »

Woman in a hammock relaxing, symbolising passive income.
ETFs

3 reasons why the Vanguard Australian Shares High Yield ETF (VHY) is a top buy for passive income

This fund is expected to pay significant dividend income in the coming year.

Read more »