ASX exchange-traded funds (ETFs) can be great options to buy for diversification and returns.
There are plenty of popular ASX ETFs, such as Vanguard MSCI Index International Shares ETF (ASX: VGS) and Vanguard Australian Shares Index ETF (ASX: VAS), out there that track a well-known index. Those Vanguard funds are commendable options.
But, I'd also like to call out certain ASX ETFs that can provide specific exposure to particular areas of the global share market where we can access compelling opportunities.
With that in mind, below are two of my favourites.
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Betashares Global Cybersecurity ETF (ASX: HACK)
The HACK ETF has been a strong performer since it started in August 2016, with an average return per annum of 16.6%. Of course, past performance is not a guarantee that those sorts of returns will continue.
Cybersecurity is an industry that can provide both defensive and growing earnings. In my opinion, several global growth trends, such as e-commerce, digital banking, and various other digitalisation services (such as government services like the ATO and Centrelink), are supporting demand in cybersecurity.
One of the most unfortunate global trends is the rise of cybercrime, which I believe should translate into more spending on cybersecurity to try to stop the 'bad guys'. According to Statista, the estimated cost of global cybercrime is forecast to rise approximately 70% between 2024 and 2029 to US$15.63 billion.
The HACK ETF owns various cybersecurity companies, including Broadcom, Cisco Systems, Crowdstrike, Infosys, Palo Alto Networks, and Leidos.
I believe the group's collective earnings can keep growing, and therefore, the HACK ETF may be able to keep delivering good returns.
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
Many Australians may be focused on ASX shares with their portfolios, so getting exposure to global shares through internationally-focused ASX ETFs could be beneficial.
The MOAT ETF gives investors access to a portfolio of attractively priced US shares that have strong economic moats.
The term 'economic moat' is another way of describing a competitive advantage, which can take various forms, such as patents, intellectual property, a leading brand, cost advantages, and so on. Businesses like Alphabet (Google), Walt Disney, and Microsoft have competitive advantages that are hard to match worldwide.
VanEck Morningstar Wide Moat ETF only invests in businesses where Morningstar analysts believe the economic moat is likely to last for at least 20 years.
The other part of the investment strategy is also important. This fund only invests in these great businesses when they're trading at appealing prices compared to what analysts think is a fair price for those companies.
When you put all that together, it's a strong investment strategy, in my eyes.
Past performance is not a guarantee of future returns, but over the past five years, it has returned an average of 14.6% per annum.
I think most Australians could benefit from having this sort of ASX ETF in their portfolio.
