What are the Best Technology ETFs 2023 on ASX? Top 5 Picks for Investors

Investors looking to gain exposure to the technology sector can invest in exchange-traded funds (ETFs) that track the performance of technology companies. ETFs provide a convenient way for investors to diversify their portfolios and gain exposure to a basket of stocks within the technology sector. The Australian Securities Exchange (ASX) offers a variety of technology ETFs that provide investors with opportunities for growth and diversification. In this article, we will explore the best technology ETFs 2023 on ASX for investors looking to invest in this sector.

Understanding Technology ETFs:

What is an ETF?

An exchange-traded fund (ETF) is a type of investment fund and exchange-traded product, i.e. they are traded on stock exchanges.  ETFs and mutual funds are comparable in many aspects, however, ETFs are traded on stock markets throughout the day from other owners, whereas mutual funds are bought and sold from the issuer depending on their price at day’s end.

What is a Technology ETF?

An exchange-traded fund that invests in businesses in the technology industry is known as a technology ETF. Companies that manufacture and sell software, such as artificial intelligence, cybersecurity, and cloud technology, as well as hardware, including computers, cellphones, semiconductors, and other gadgets, are included in tech ETFs.

How does Technology ETFs work?

Technology ETFs follow the performance of a certain index, such as the S&P/ASX All Technology Index or the Nasdaq Composite Index. The performance of the ETF, which invests in a portfolio of companies that are part of the index, tracks that of the underlying index. On stock markets, investors can buy and sell shares of the ETF, and supply and demand determine its price.

What are the advantages of investing in Technology ETFs?

Technology ETFs provide investors with a number of advantages, including:

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Top 5 Best Technology ETFs 2023 on ASX

1> BetaShares Global Cybersecurity ETF (HACK)

Overview of HACK ETF:

The leading businesses in the international cybersecurity sector are easily and transparently exposed through the BetaShares Global Cybersecurity ETF (HACK). It is a key component of a global equity allocation that offers benefits for transparency and diversification.

Performance and Historical Data:

HACK has a 1-year return of -9.16%, a 3-year return of 16.30%, and a 5-year return of 14.18%. The ETF’s expense ratio is 0.57%.

Key Holdings:

The ETF’s top holdings include CrowdStrike Holdings, Zscaler, Fortinet, and Palo Alto Networks.

Investment Strategy:

HACK invests in companies that provide cybersecurity solutions, including hardware, software, and services. The ETF’s investments are diversified across a range of cybersecurity sub-sectors, including network security, cloud security, and identity management.

2> ETFS Morningstar Global Technology ETF (TECH)

Overview of TECH ETF:

The Global X Morningstar Global Technology ETF (TECH) seeks to invest in businesses that are well-positioned to gain from the increased adoption of technology, including businesses whose main line of business is the provision of cloud and edge computing infrastructure and hardware, as well as computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS).

Performance and Historical Data:

TECH has a 1-year return of -3.51%, a 3-year return of 12.86%, and a 5-year return of 14.05%. The ETF’s expense ratio is 0.45%.

Key Holdings:

The ETF’s top holdings include Apple, Microsoft, Amazon, Alphabet (Google), and Facebook.

Investment Strategy:

TECH invests in a diversified portfolio of global technology companies across various sub-sectors, including software, hardware, semiconductors, and internet services. The ETF uses a rules-based approach to select companies based on Morningstar’s proprietary analysis of the companies competitive advantages, financial health, and fair value estimates.

3> BetaShares Asia Technology Tigers ETF (ASIA)

Overview of ESPO ETF:

BetaShares Asia Technology Tigers ETF is an Australian exchange-traded fund. The Fund seeks to provide an investment return that corresponds to the performance of the Sol active Asia ex-Japan Technology & Internet Tigers Index (the “Index”), before taking into account fees and expenses.

Performance and Historical Data:

ASIA has a 1-year return of -13.20%, and a 3-year return of 5.08%. The ETF’s expense ratio is 0.67%.

Key Holdings:

The ETF’s top holdings include Alibaba Group, Tencent Holdings, Samsung Electronics, and Taiwan Semiconductor Manufacturing.

Investment Strategy:

ASIA invests in a diversified portfolio of technology companies that are headquartered in Asia, with a focus on China, Taiwan, and South Korea. The ETF’s investments are diversified across various sub-sectors, including software, hardware, and semiconductors.

4> iShares Global Healthcare ETF (IXJ)

Overview of IXJ ETF:

IXJ provides global pharmaceutical, biotechnology, and medical device companies with market-like exposure. The fund’s holdings are drawn from the S&P Global 1200 universe, which effectively screens out small caps, giving the fund a large-cap bias in comparison to our benchmark. Aside from that, the geographical and sector weights appear to be neutral, making it a viable entry point into global healthcare. BlackRock Fund Advisors indexes using a sampling method. This means that the fund may not hold all of the stocks in the underlying index, but will instead hold securities with similar investment profiles. IXJ stocks are selected and weighted based on their float-adjusted market capitalization. The index is rebalanced every three months.

Performance and Historical Data:

IXJ has a 1-year return of 5.06%, a 3-year return of 8.06%, and a 5-year return of 11.06%. The ETF’s expense ratio is 0.46%.

Key Holdings:

The ETF’s top holdings include Johnson & Johnson, Pfizer, Roche Holdings, Novartis, and Merck.

Investment Strategy:

IXJ invests in a diversified portfolio of healthcare companies across various sub-sectors, including pharmaceuticals, biotechnology, healthcare equipment, and healthcare providers. The ETF uses a market-cap-weighted approach to select companies, with larger companies having a higher weighting in the portfolio.

5> VanEck Vectors Video Gaming and eSports ETF (ESPO)

Overview of ESPO ETF:

VanEck Video Gaming and eSports ETF (ESPO®) seeks to replicate the price and yield performance of the MVIS® Global Video Gaming and eSports Index (MVESPOTR) as closely as possible, before fees and expenses, in order to track the overall performance of companies involved in video game development, esports, and related hardware and software.

Performance and Historical Data:

ESPO has a 1-year return of -7.95%, 6 months return of 2.54%, and 3 months return of 11.06%. The ETF’s expense ratio is 0.56%.

Key Holdings:

The ETF’s top holdings include Tencent Holdings, NVIDIA, Advanced Micro Devices, and Sea.

Investment Strategy:

ESPO invests in companies that derive a large portion of their revenue from video gaming and esports-related activities, such as game publishers, hardware manufacturers, and streaming platforms. The ETF’s holdings are spread across many sub-sectors, including console gaming, PC gaming, and mobile gaming.

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FAQs:

Conclusion:

Investing in technology ETFs is an excellent way for investors to gain exposure to the technology sector while diversifying their portfolios. The ASX offers a variety of technology ETFs that cater to different investment strategies and risk profiles.