2 growth-focused ETFs rated as buys

There are some growth-focused exchange-traded funds (ETFs) that are rated as buys by a Motley Fool investment service.

What are exchange traded funds?

As linked above, ETFs are investment vehicles that allow the investor to buy a whole group of businesses at once. With some of them you can buy a decent number of shares with one investment – 50 to 100 holdings. Other investments give exposure to thousands of businesses at once.

Some ETFs are focused are providing dividend income to investors like Vanguard Australian Shares High Yield ETF (ASX: VHY) and BetaShares S&P 500 Yield Maximiser (ASX: UMAX).

However, there are other ones that have more of a growth profile:

Betashares Nasdaq 100 ETF (ASX: NDQ)

This ETF gives investors exposure to 100 of the biggest businesses on the NASDAQ, which is a stock exchange in the US.

Many of the world’s biggest technology businesses are listed on the NASDAQ, which is apparent when you look at the ETF’s biggest holding exposures.

On 20 November 2020, its biggest positions were: Apple, Microsoft, Amazon, Alphabet, Facebook, Tesla, Nvidia and PayPal. There are also some other well-known technology businesses slightly down its holdings list such as Adobe, Netflix, Intel, Qualcomm and Broadcom.

Almost half of the holdings are in the sector ‘information technology’ with another 20% invested in communication services.

However, there are more than just technology shares on the NASDAQ. There are also businesses such as PepsiCo, Costco and Starbucks. Almost 20% of the ETF is invested in consumer discretionary shares.

The ETF has produced returns larger than the ASX in the past few years. Over the past year, the Betashares Nasdaq 100 ETF’s net return has been 34.6%. Over the past three years it has produced net returns of 25% per annum. In the past five years it has produced net returns of 19.8% per annum. Finally, since inception in May 2015 it has made net returns of 20.8% per annum.

Betashares Nasdaq 100 ETF has an annual management fee of 0.48% per annum. According to BetaShares, this ETF’s trailing 12-month distribution yield amounts to 2.6%.

This ETF is still rated as a buy by the Motley Fool Share Advisor service.

Betashares Global Cybersecurity ETF (ASX: HACK)

This ETF is focused on businesses that are looking to provide cybersecurity services to governments, businesses and other organisations.

Its top holdings include companies like Crowdstrike, Okta, Accenture, Zscaler, Cisco Systems, Cloudflare, F5 Networks, Palo Alto Networks, Leidos Holdings and Fireeye.

BetaShares says that with cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future. This ETF includes global cybersecurity giants as well as emerging players, from a range of global locations.

More than half of the portfolio is invested to the sector of ‘systems software’, but it’s also invested in businesses focused on internet services and infrastructure, communications equipment, application software and aerospace and defence.

In terms of returns, the net returns haven’t been quite as high as the NASDAQ one, over the past year its net return has been 16.2%, over the past three years it has delivered average returns per annum of 18.3% and since inception in August 2016 it has delivered net returns of 16.8% per annum.

With a country allocation of 89.5% to the USA, the vast majority of the ETF is focused on American companies. However, there is allocation of more than 3% to Israel and the UK, 2% to Japan and 1.4% to France.

Betashares Global Cybersecurity ETF has an annual management fee of 0.67%.

This ETF is currently rated as a buy by the Motley Fool Pro service.

More reading

• 2 ETFs that ASX investors need to know about
• 2 ASX tech ETFs analysts rate as a ‘buy’ today
• 10 hottest (and coldest) Aussie ETFs right now
• 2 quality ETFs that are popular with ASX investors
• 2 tech ETFs generating big returns

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of BETA CYBER ETF UNITS and BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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