There are a couple of tech exchange-traded funds (ETFs) that look really interesting to me. I’d be willing to invest $2,000 into those two tech ETFs.
I really love the idea of ETFs and how easy it makes investing in shares. Technology businesses are predominately the ones that are changing our lives the most and I think it would be good to get long term exposure to them through these investment ideas:
Betashares Cloud Computing ETF (ASX: CLDD)
As the name suggests, this investment is about businesses in the cloud computing space.
COVID-19 has brought forward a lot of demand for cloud computing. I think the world was headed that way anyway, but the businesses in this tech ETF are really benefiting. Even so, a lot of the world’s data and software applications are still outside of the cloud.
Continued strong growth is likely, in my opinion.
To be eligible to make into this portfolio, a business must generate a certain percentage of its revenue from cloud computing services.
You’ve probably heard of some of the biggest positions including: Proofpoint, Xero Limited (ASX: XRO), Dropbox, Zscaler, Twilio, Workday, Shopify, Netflix, Akamai Technologies and Paycom Software.
As you’d expect, most of the ETF’s portfolio is listed in the US with a weighting of 86.8%. The only other countries with a material weighting are China (4.4%), New Zealand (4.3%) and Canada (4.1%).
It’s a brand new ETF – the inception date is February 2021 – but the index’s performance has been strong. Over the last three years it has generated returns of 35.1% per annum.
Betashares Nasdaq 100 ETF (ASX: NDQ)
This tech ETF is invested in 100 businesses. However, it can be effectively used to invest in the large US tech shares.
Looking at the top holdings, Apple, Microsoft, Amazon, Tesla, Alphabet, Facebook, NVIDIA and PayPal alone make up just over half
of the portfolio’s allocation.
Other names like Adobe, Netflix, Booking and Intuitive Surgical are also part of the portfolio.
These are the names that are changing our lives in noticeable ways. They are either taking more of our money, or more of our eyeball time.
Betashares Nasdaq 100 ETF owns a quality portfolio of businesses and it has been generating really good returns. Over the last five years, NDQ ETF’s net returns have been an average of 24.7% per annum.
Whilst all of the holdings are listed in the US on the NASDAQ, the underlying earnings are worldwide.
Summary thoughts about these ETFs
I wouldn’t expect the next five years of returns to be as strong as the last five, particularly if interest rates start rising again. However, I think it’s these tech ETFs that are going to see their underlying holdings generate a lot of revenue growth and hopefully profit growth in the coming decade.
