I reckon that these 2 global exchange-traded funds (ETFs) have a lot of growth potential and are worthy considerations for 2022.
Whilst some ETFs are focused on an entire share market, like Vanguard Australian Shares Index ETF (ASX: VAS), there are others that give exposure to more focused growth areas, like these two:
VanEck Video Gaming and Esports ETF (ASX: EPSO)
I think that this ETF is one investment that can deliver underlying revenue and earnings growth for a long period of time.
It’s about the video gaming and e-sports sector. Some of the businesses in this portfolio includes Nvidia, Advanced Micro Devces, Tencent, Roblox, Netease, Unity Software, Sea, Nintendo, Take Two Interactive Software and Bandai Namco.
The video game industry is reportedly now larger than both the movie and music industries combined. E-sport tournaments are drawing crowds that can challenge World Cup soccer and the Olympic Games.
E-sports revenue has been growing by an average of 28% per annum since since 2015 according to VanEck. E-sports has created new potential revenue streams including media rights, merchandise, ticket sales and advertising.
I think that video gaming revenue can continue to grow revenue and earnings even if the global economy goes through a slowdown.
It has annual management fee of 0.55%, which seems pretty reasonable for the type of ETF it is.
It’s pretty diversified geographically compared to other global ETFs. The US had a 47.6% weighting, Japan had a 18% weighting, China had a 17.2% weighting, Singapore had a 5.3% weighting and South Korea had a 4.1% weighting. There are other countries but with smaller exposures.
Betashares Global Cybersecurity ETF (ASX: HACK)
This ETF gives investors exposure to the global cybersecurity sector.
On 24 December 2021, some of its biggest holdings were: Cisco Systems, Accenture, Palo Alto Networks, Crowdstrike, Cloudflare, Tenable, Juniper Networks, Fortinet, Okta and F5 Networks.
Sadly, there is a long-term trend for there to be more cyber attacks on individuals and organisations. That suggests to me that the underlying businesses in the ETF’s portfolio have good growth potential for the foreseeable future. More and more important information, data and transactions are being done online. So it’s important those things are protected.
The annual management fee is 0.67%. After fees, the net returns have been an average of 22.6% per annum over the last five years. I think that’s an impressive result historically, but the next five years may not be quite as strong.
Looking at the portfolio, the vast majority of the businesses are based in the US – more than 90% – but the underlying earnings are global. Israel, Japan and France are the only other countries with allocations of more than 1%.
