I think exchange-traded funds (ETFs) are one of the best ways to capture some broad exposure to the technology space. Tech shares have made a name for themselves recently as being some of the best growth shares money can buy. But some ASX tech shares are more equal than others.
In September 2020, tech is a space defined by potential overvaluations and even the dreaded ‘bubble’ speculation, both on the ASX and over in the United States. We have some tech shares like Afterpay Ltd (ASX: APT), Tesla Inc (NASDAQ: TSLA) and Sezzle Inc (ASX: SZL) that have given investors triple-digit returns many times over in just the past few months. So rather than trying to pick winners and losers in this crowded space, a better solution for many ASX investors might be to use ETFs for a more balanced and diversified approach. So here are 3 ETFs you can do just that with today.
3 ASX tech ETFs
BetaShares Nasdaq 100 ETF (ASX: NDQ)
This ETF is a US-focused one and holds 100 of the largest companies within the Nasdaq exchange. The Nasdaq is renown for its tech exposure and houses most of the companies we would think of when ‘US tech’ is mentioned. Its top holdings include Apple Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT) and Amazon.com, Inc. (NASDAQ: AMZN). I think the Nasdaq will continue to outperform both the US S&P 500 and our own S&P/ASX 200 Index (ASX: XJO) over the coming decade or two. As such, I think it’s a perfect ETF to buy for American tech exposure today.
VanEck Vectors MSCI World ex Australia Quality ETF (ASX: QUAL)
Another ETF to consider today is this offering from VanEck. QUAL is a fund with more than 300 holdings from around the world. These are selected on a ‘quality’ criteria basis, which includes screeners on low leverage, high earnings growth rates and high returns on equity. You’ll find many tech companies which fit these criteria in QUAL, such as Apple, Microsoft, Alphabet Inc. (NASDAQ: GOOG)(NASDAQ: GOOGL) and NVIDIA Corporation (NASDAQ: NVDA), but also companies like healthcare giant Jonson & Johnson (NYSE: JNJ) and shoe-maker Nike Inc (NYSE: NKE) as well.
For a more balanced and diversified fund than NDQ, I think QUAL is another top choice for investors today.
BetaShares Asia Technology Tigers ETF (ASX: ASIA)
Finally, we have this Asian-focused fund. ASIA is something of an answer to NDQ from the side of the globe closer to home. It houses all of the top tech shares from Asia, including from China, Hong Kong, Taiwan, India and Korea (the south side). This includes Tencent Holdings, Alibaba Group, JD.com and Samsung Electronics.
Although there have been some geopolitical tensions between China and the US (as well as Australia) in recent times, I don’t think this should exclude us from investing in some of the highest-growth markets in the world. If you’re interested in tech names outside the US titans, I think this ETF is another great choice.
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More reading
- Why the Afterpay (ASX:APT) and Sezzle (ASX:SZL) share prices are falling again today
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- Afterpay (ASX:APT) share price facing new competitive pressure
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Johnson & Johnson, Nike, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Amazon, Apple, Microsoft, Nike, NVIDIA, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETANASDAQ ETF UNITS. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson and Sezzle Inc and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Alphabet (A shares), Amazon, Apple, BETANASDAQ ETF UNITS, Nike, NVIDIA, and Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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