Certain areas of the share market have been under significant pressure in recent months.
This has dragged a number of quality exchange traded funds (ETFs) deep into the red.
While this is disappointing, it may have created a buying opportunity for investors.
For example, the three ASX ETFs listed below have fallen by more than 25% from their highs and could be worth a closer look. Here's what you want to know about them:
BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)
The BetaShares S&P/ASX Australian Technology ETF has been hit hard, falling around 38% from its highs.
This ASX ETF holds leading Australian technology names such as WiseTech Global Ltd (ASX: WTC), Xero Ltd (ASX: XRO), and TechnologyOne Ltd (ASX: TNE). These companies have faced heavy selling as investors reassessed valuations and the potential impact of artificial intelligence on software businesses.
However, these are not speculative startups. They are profitable, globally expanding companies with recurring revenue models and high switching costs.
Australia's tech sector is still relatively young compared to the US. If even a handful of these businesses continue scaling internationally over the next decade, this fund's current weakness may look like a compelling long-term entry opportunity.
Betashares Global Cybersecurity ETF (ASX: HACK)
The Betashares Global Cybersecurity ETF has fallen approximately 26% from its high amid broader tech volatility.
The ETF includes global cybersecurity leaders such as CrowdStrike (NASDAQ: CRWD), Palo Alto Networks (NASDAQ: PANW), and Fortinet (NASDAQ: FTNT). While these stocks have been volatile, the underlying demand for cybersecurity has not disappeared.
In fact, cyber threats continue to rise in frequency and sophistication. Governments and corporations cannot afford to ignore digital security. In many cases, cybersecurity budgets are considered essential rather than discretionary. This bodes well for the companies in this fund over the next decade and beyond.
VanEck Video Gaming and Esports ETF (ASX: ESPO)
The VanEck Video Gaming and Esports ETF is down about 30% from its highs.
This ASX ETF provides exposure to companies involved in video games, hardware, and esports. Its holdings include Nintendo, Advanced Micro Devices (NASDAQ: AMD), Take-Two (NASDAQ: TTWO), and Electronic Arts (NASDAQ: EA).
Over the past decade, gaming has evolved into a global entertainment industry with recurring revenue models, digital downloads, and in-game purchases. As connectivity improves and new technologies such as cloud gaming develop, the industry's addressable market continues to expand.
In light of this, while a 30% pullback may be painful in the short term, it has lowered the entry point for investors who believe in the long-term growth of interactive entertainment. This fund was recently recommended by analysts at VanEck.
The post 3 ASX ETFs down 25% that could be big long-term winners appeared first on The Motley Fool Australia.
Motley Fool contributor James Mickleboro has positions in Technology One, WiseTech Global, and Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Advanced Micro Devices, BetaShares Global Cybersecurity ETF, CrowdStrike, Fortinet, Take-Two Interactive Software, Technology One, WiseTech Global, and Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Electronic Arts and Palo Alto Networks. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended Advanced Micro Devices, CrowdStrike, and Technology One. 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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