How to tap into the rise of two megatrends currently reshaping economies and markets

Thematic ETFs, much like a capsule wardrobe, can provide a convenient uniform to encapsulate a powerful trend. And if you’re looking to capture two of the most powerful global trends at the moment - technology innovation in Asia and the rise of cybersecurity - you may find an attractive addition in the Betashares' thematic ETFs. 

I spoke with Hugh Lam, investment strategist at Betashares, about two of their aptly named ETFs: the Betashares Asia Technology Tigers ETF (ASX: ASIA) which provides exposure to leading technology companies across China, South Korea and Taiwan, and the Betashares Global Cybersecurity ETF (ASX: HACK), which focuses on companies at the forefront of digital security, a sector seeing surging demand amid increasing cyber threats, incidents and geopolitical tensions.

Both ETFs offer a way to gain targeted exposure to the current hot topics and industries shaping the future, as a way of complementing a broader investment portfolio. For the full experience, watch the video below.

Why Asian tech is in the spotlight

China has put technology at the heart of its economic strategy. For years, manufacturing and exports fuelled growth, but rising wages and competition from countries like Vietnam and Indonesia are pushing China to prioritise tech-driven industries. This transition has fuelled strong stock market performance, with Chinese equities outpacing the S&P 500 by about 20% in the first quarter alone.

A significant catalyst has been DeepSeek, an AI model developed by a Chinese startup using cost-effective NVIDIA chips. Its success has sparked optimism across China’s tech sector. Companies like Alibaba, Tencent, and Xiaomi are all finding new ways to integrate AI, from e-commerce to digital advertising and even electric vehicles.

Why cybersecurity matters more than ever

While the growth and expansion of AI is transforming tech, its rise has had natural consequences on cybersecurity. While businesses have taken to AI to boost efficiency, on the flipside, cybercriminals are leveraging the very same tools to develop more sophisticated attacks. A recent example involved Salt Typhoon, an alleged state-backed Chinese threat actor, which infiltrated critical U.S. telecom networks.

With cyber threats and incidents escalating, cybersecurity has become a critical area for investment. The Betashares Global Cybersecurity ETF (HACK) provides exposure to firms tackling some of the most pressing security challenges worldwide.

Geopolitical tensions are also driving demand for stronger digital defences. Conflicts between China, the U.S., Russia and Ukraine have made cybersecurity a top priority for governments and corporations. Spending on security solutions is expected to grow at double-digit rates through 2028, and projected to surpass US$260 billion this year, according to Morgan Stanley.

Snapshot summary

Fund profile

Name: Betashares Asia Technology Tigers ETF (ASX: ASIA) 

Asset class: International equities

Investment objective: Diversified exposure to the high-growth Asian technology sector that is under-represented in the Australian sharemarket, and a regional diversifier to investor portfolios.

Fund profile

Name: Betashares Global Cybersecurity ETF (ASX: HACK) 

Asset class: International equities

Investment objective: Diversified exposure to global cybersecurity companies, a sector that is heavily under-represented on the ASX. 

Edited transcript

Anna Dadic: Hello and welcome to Livewire Markets Fund in Focus. My name is Anna Dadic, and I'm joined by Hugh Lam, investment strategist at Betashares. Today we're going to be talking about two funds: the Betashares Asia Technology Tigers ETF (ticker code ASIA) and the Betashares Global Cybersecurity ETF (ticker code HACK). Hi Hugh, thanks for joining us.

Hugh Lam: Thanks, Anna.

Anna Dadic: Let's start with the roles of the ETFs we're discussing today and how they play in a portfolio.

Hugh Lam: Sure. HACK and ASIA are what we call thematic ETFs, meaning their performance is underpinned by strong investment trends or themes - think AI, technology, robotics, and cybersecurity. Thematic ETFs typically have a smaller allocation within an investor’s portfolio and are held as what we call satellites. The core of an investor's portfolio is generally invested in broad market indices such as the ASX 200 and S&P 500.

Anna Dadic: Why would investors consider adding them to their portfolio?

Hugh Lam: There are a couple of reasons. The first is to enhance returns. A strong thematic can deliver consistent performance throughout market cycles - HACK is a great example of this. Second, thematic ETFs can serve as diversifiers. They focus on specific regions, sectors, or themes and hold companies that may not be present in other parts of an investor’s portfolio. Adding a thematic ETF can help diversify exposure across different areas.

Anna Dadic: Let’s talk about the two funds separately. Starting with ASIA, why is Asia tech interesting right now?

Hugh Lam: ASIA has been an interesting ETF, especially with China embracing technology as a strategic priority. Over the past decade, China’s economy has been driven by exports and low-value manufacturing, but this competitive advantage is shifting to neighbouring countries like Vietnam and Indonesia. As a result, China is focusing on technology to drive long-term growth. Technology enhances productivity and reduces costs, which is crucial as wages in China continue to rise.

We've also seen significant outperformance in Chinese equities this year. The China index has outperformed the S&P 500 by about 20% in just three months. This coincides with the release of DeepSeek, an AI model developed by a Chinese startup, trained on more efficient and cost-effective NVIDIA chips. Companies like Alibaba and Tencent have also contributed to this optimism. Alibaba has partnered with Apple to deploy AI features in China, and Xiaomi has transitioned from a domestic smartphone manufacturer to a global EV producer.

Anna Dadic: Which companies do investors get exposure to via this ETF?

Hugh Lam: ASIA provides exposure to Chinese technology giants such as Alibaba, Tencent, and Xiaomi, as well as major tech firms in Korea and Taiwan. Key holdings include Taiwan Semiconductor Manufacturing Company (TSMC), the largest contract chip manufacturer in the world, producing chips for NVIDIA. Other holdings include Samsung and SK Hynix, which dominate the memory chip market and supply critical components for NVIDIA GPUs.

Anna Dadic: How has the ETF performed, and what are the fees?

Hugh Lam: ASIA has performed well, delivering a 35% return over the last year and 11% year-to-date. The fund’s fee is 67 basis points, or 0.67% per year.

Anna Dadic: Now let’s discuss HACK and the evolution of cybersecurity as an investment thematic.

Hugh Lam: Cybersecurity has been a strong thematic for many years, but we’ve seen a resurgence recently due to two main factors. First, the rise of AI and technology has created new cybersecurity challenges. While AI boosts productivity, it is also being exploited by bad actors to attack critical systems. A notable example is Salt Typhoon, an alleged Chinese state-backed actor that hacked into AT&T's infrastructure in the U.S.

Second, we are in a geopolitically fragmented world. With tensions between China, the U.S., Russia, and Ukraine, governments and businesses are prioritising data security. According to Morgan Stanley, global security spending is projected to grow at double-digit rates annually, surpassing $260 billion USD in 2024. This benefits industry leaders like CrowdStrike and Palo Alto Networks. Businesses are also consolidating their cybersecurity products from 80–100 down to 10–15, favouring dominant players such as these.

Anna Dadic: Which companies do investors get exposure to via this ETF?

Hugh Lam: The top five holdings in HACK include CrowdStrike and Palo Alto Networks. CrowdStrike specialises in endpoint security, protecting devices and data. Palo Alto Networks focuses on network security, safeguarding ports and infrastructure. Other notable holdings include Infosys, Broadcom, and Zscaler.

Anna Dadic: How has HACK performed, and what are its fees?

Hugh Lam: HACK has the same fee as ASIA, at 67 basis points (0.67% per year). Over the past year, it has returned 22%. It recently reached AU$1.2 billion in assets under management, making it the largest thematic ETF in Australia.

Anna Dadic: Finally, where can investors find more information about both funds?

Hugh Lam: Investors can visit our website for detailed information on both funds. There are dedicated fund pages for HACK and ASIA, as well as an insights section covering market trends and themes like cybersecurity and Asian technology.

Anna Dadic: Excellent. Hugh, thank you so much for sitting down with Livewire today.

Hugh Lam: Thanks for having me, Anna.

Anna Dadic: If you enjoyed this interview, make sure to like and subscribe to our YouTube channel for new content every week.