Investing in technology can be one of the most promising strategies for long-term gains, given the potential for high profit margins and rapid growth. However, rather than picking individual stocks, exchange-traded funds (ETFs) offer a way to capture the growth of leading tech companies through a diversified portfolio. Here, we’ll explore two popular ASX-listed ETFs that are lighting up the tech sector: the Betashares Global Cybersecurity ETF (ASX: HACK) and the Global X Morningstar Global Technology ETF (ASX: TECH). Both of these funds offer unique advantages and recent performance highlights worth discussing.
Betashares Global Cybersecurity ETF (ASX: HACK): Guarding Against Cyber Threats
The Betashares Global Cybersecurity ETF, also known as the HACK ETF, targets a rapidly growing corner of the tech industry: cybersecurity. With cyber threats escalating globally, demand for cybersecurity solutions has surged. The HACK ETF is designed to capitalise on this need by holding shares in top global companies that specialise in cybersecurity.
Why Cybersecurity is Crucial Today
Cybersecurity has become a priority for both individuals and businesses. In Australia alone, the cost of cybercrime continues to rise, with the 2023 ASD Cyber Threat Report highlighting a 14% increase in costs. Small businesses are hit particularly hard, with an average cybercrime-related expense of $46,000. Meanwhile, the number of cybercrime reports has surged to 94,000, marking a 23% increase year-over-year. With cyber threats affecting critical sectors like banking, e-commerce, and government services, companies providing cybersecurity services are in high demand.
Top Holdings and Impressive Returns
HACK holds shares in leading cybersecurity companies, including Crowdstrike, Cisco Systems, Palo Alto Networks, Cloudflare, and Okta. These companies are positioned to benefit from the ongoing push for digital security. Over the past five years, the HACK ETF has generated an average return of 16.4% per year. While past performance doesn’t guarantee future returns, the HACK ETF’s track record underscores its potential in the growing cybersecurity field.
Global X Morningstar Global Technology ETF (ASX: TECH): Broad Exposure to Global Tech Leaders
The Global X Morningstar Global Technology ETF, or TECH ETF, provides a broader approach to tech investing by focusing on leading tech companies worldwide. Rather than concentrating on a single niche like cybersecurity, the TECH ETF spreads its investments across a wide array of tech sectors, including software, digital infrastructure, and platform-based services.
A Diverse Portfolio with Global Reach
While the TECH ETF is heavily weighted toward US-listed companies (77% of its portfolio), it also includes holdings in other countries like Japan, Canada, Germany, and Israel. This international diversification helps investors capture tech growth from markets worldwide. The TECH ETF’s portfolio includes well-known names like Salesforce, Autodesk, Shopify, Block, and Lyft, with each of these companies representing more than 4% of the fund’s total holdings.
Consistent Returns Over Time
The TECH ETF has produced an average annual return of 13.9% over the past five years, reflecting the overall resilience of the tech sector despite market fluctuations. This ETF gives investors exposure to some of the world’s most innovative companies, many of which are focused on developing solutions that enable everything from digital transactions to remote work and advanced automation.
Why These ETFs Are Gaining Momentum Now
HACK and TECH have been outperforming the broader ASX 200, even in a tough market. Here’s what sets them apart:
Breaking Out of the ASX Comfort Zone
Unlike many ASX investments tied to local stocks and the Australian economy, these ETFs focus on global tech leaders, particularly in the US. This international reach positions them to benefit from cutting-edge advancements in technology, regardless of challenges on the local front.
Currency Dynamics Playing Favourably
The recent drop in the Australian dollar against the US dollar has given these ETFs an extra edge. With significant exposure to US-based companies, the weaker Aussie dollar enhances returns for local investors, adding another reason for their rising appeal.
US Tech Driving Growth
Tech powerhouses like Apple, Microsoft, and Alphabet are pushing toward record valuations, reflecting strong investor confidence in the sector. Their success is cascading through to other companies included in HACK and TECH, making these ETFs a practical choice for tapping into the broader tech surge.
HACK and TECH are carving out space beyond the usual ASX offerings, creating opportunities for investors ready to look globally. They represent a fresh angle for those seeking to capitalise on the dynamic nature of tech innovation.
Cybersecurity and Tech ETFs Are More Than Just a Trend
The focus on cybersecurity and technology in these ETFs is not merely a passing trend; it’s a response to real global needs. From securing personal data to enhancing business productivity, the tech sector plays an essential role in modern life, and these ETFs allow investors to participate in that growth.
The HACK ETF is perfect for investors who want exposure to cybersecurity, a sector with immense potential as the world becomes more digital. The TECH ETF, on the other hand, offers a broader investment in the tech industry, capturing gains from various subsectors, such as cloud computing, software development, and digital services.
A Bright Future for ASX Tech ETFs
Tech-focused ETFs like HACK and TECH are flipping the script on traditional ASX investing. While the usual banking and mining sectors hold their ground, these funds open the door to fast-moving global trends like cybersecurity and cutting-edge technology. They offer investors a chance to step outside the old guard and into high-growth opportunities reshaping the economy.
Sure, there are risks—there always are. But for anyone keeping an eye on where the real innovation is happening, these ETFs are hard to ignore. They’re not just along for the ride; they’re plugged into sectors driving the future.
HACK and TECH are not about playing it safe. They are about being in the game as the tech world evolves. If you are looking for something beyond the same old ASX story, these funds could be worth a closer look.
