This is where exchange-traded funds (ETFs) can come in very handy. By owning a basket of 50 or 100 stocks, an investor gets diversified exposure to a particular theme, sector, or geography.

With this in mind, here are two ETFs that are buying opportunities worth thinking about right now.

Physical AI revolution

Let’s start with an ETF that offers deep exposure to perhaps one of the most powerful technology trends this century. That is the iShares Automation & Robotics UCITS ETF (LSE:RBTX).

This fund focuses on companies developing automation and robotic technology. This area is being turbocharged by rapid advancements in AI, leading to what Nvidia CEO Jensen Huang recently called a “ChatGPT moment” for robotics (physical AI).

The ETF holds 134 stocks, covering the entire ecosystem required to make machines intelligent and autonomous. So that’s AI, which is ‘brains’ behind the automation, machine vision and sensor technologies, semiconductor equipment, and traditional manufacturing robots. 

Now, what I like here is that the ETF diverges significantly from the top of the Nasdaq-100 index. The single Magnificent Seven stock is Nvidia, but the AI chip leader is only a 3.13% weighting. This means there is far less Big Tech concentration risk.

A key risk here would be a global slowdown, which could result in slower adoption of robotic technology. Cost inflation and supply chain snags are also challenges that this industry is facing right now.

However, the loner-term trajectory looks far more certain. Nvidia’s chief executive says that in future every industrial company will be a robotics company, creating a multi-trillion dollar global market.

This ETF offers long-term investors exposure to this growth without having to pick individual winners. The ongoing charge is 0.4%.

High-quality blue chips

The second fund is iShares Core EURO STOXX 50 UCITS ETF (LSE:EUE), which is made up of the 50 largest blue chips from the eurozone.

Admittedly, Europe isn’t known for fast growth. As the old (perhaps slightly unfair) saying goes, “the US innovates, the EU regulates“. Indeed, between 2008 and 2023, EU GDP increased by 13.5% while US GDP rose by 87%, according to the World Bank.

The gap is probably going to widen further as the US is a net exporter of energy and AI technology while the EU relies on imports for both. Therefore, a spike in energy costs could hit European companies and consumers hard this year. 

Yet there are some truly world-class businesses across Europe, including ASML, Banco Santander, LVMH (Moët Hennessy Louis Vuitton), Hermes International, and German software firm SAP.

Zooming in on ASML, this is the only company in the world that makes EUV (extreme ultraviolet) lithography machines. Without these, there would be no advanced semiconductors and AI revolution. 

Or take plane maker Airbus, another top holding in the ETF. Its current order backlog is approximately 8,754 commercial aircraft (or about 10 years of work).

Moreover, European shares are cheap, with the ETF trading at just 17 times earnings while sporting a 2.6% dividend yield. The ongoing charge here is just 0.1%.

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Here are three very different ETFs that I think are worth assessing for a Stocks and Shares ISA.

Property income

The iShares MSCI Target UK Real Estate ETF (LSE:UKRE) offers diversified property exposure without owning physical real estate. Over half of the fund is in real estate investment trusts (REITs) and property companies, with the rest in UK inflation-linked gilts (government bonds whose payments rise with inflation). Bonds helps smooth out volatility and balance risk. 

REITs held here include Segro, Land Securities, and LondonMetric Property. The latter has a £7.4bn portfolio across sectors like logistics (warehouse tenants include Tesco, Primark, and Next) and entertainment and leisure (Alton Towers and Travelodge).

Of course, a UK recession is a risk. A downturn would add challenges for the retail and hospitality sectors, while souring investor sentiment for UK property and shares. It’s worth noting that the ETF has underperformed since interest rates rose sharply in 2022.

On balance though, I think now is a good time to consider investing for the long term. The ETF is offering a bumper 7% dividend yield!

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Robotics growth

Turning to growth with the iShares Automation & Robotics ETF (LSE:RBTX). This fund is invested in 138 stocks related to the development of automatic and robotic technology.

Unlike the one above, the ETF has had a better run — up 50% in three years.

Top holdings include chipmakers Nvidia and Advanced Micro Devices, which are suppling the computing power behind AI and robotics.

On the industrial side, giants like ABB and Siemens are world leaders in factory automation. Software players like Autodesk and Snowflake are also in the top 10 holdings.

Now, this tech bias does leave the fund open to underperformance if the sector fell out of favour. Some of the top holdings are highly valued, so this adds some valuation risk.

Over the long run, however, I’m very bullish on the robotics theme, particularly self-driving cars.

The ChatGPT moment for general robotics is just around the corner.

Nvidia CEO Jensen Huang

Investing in Europe

Finally, I think the iShares Core EURO STOXX 50 ETF (LSE:EUE) is one to examine. This tracks 50 of the largest firms across the eurozone, including German software giant SAP, Banco Santander, and French luxury conglomerate LVMH (Moët Hennessy Louis Vuitton).

Also in the top 10 holdings are two very special European businesses. The first is plane maker Airbus, whose backlog is enormous thanks to surging demand for fuel-efficient jets like the A320neo family. It has been taking market share from crisis-hit US rival Boeing.

Meanwhile, ASML is the only company in the world supplying extreme ultraviolet (EUV) lithography machines. These allow chipmakers like Taiwan Semiconductor Manufacturing and Samsung to make the most advanced semiconductors.

Without ASML’s machines, there would be no iPhone processors or AI revolution. 

That said, were ASML or SAP to sell off aggressively, the ETF could suffer because this high-quality pair account for over 13% of the portfolio. So there’s a degree of concentration risk.

But given the high quality of the stocks, I expect this ETF to do well over time. There’s also a handy near-3% dividend yield on offer.

The post 3 ETFs from the London Stock Exchange to consider for an ISA appeared first on The Motley Fool UK.

Take the following growth-based ETFs, for instance. As the chart below shows, they’ve delivered eye-popping returns during the past five years.

And if these ETFs deliver the same performance over the next five years, an investor would turn a £21,000 lump sum invested equally across them into £41,704. They’d have more than doubled their money!

Remember that past performance isn’t a guarantee of future returns. But here’s why I think they’re worth serious consideration.

Tech titan

As its name indicates, the Invesco EQQQ Nasdaq 100 ETF provides robust exposure to the tech-focused Nasdaq exchange. Just over 51% of its entire weighting is dedicated to the information technology sector.

Furthermore, the so-called Magnificient Seven stocks — Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla — are among its eight largest holdings, the other being Broadcom.

These businesses are heavyweights in their respective fields. And they have the scale and the knowhow to capitalise on emerging tech opportunities like artificial intelligence (AI), quantum computing, and robotics.

Historically, the Nasdaq index can be far more volatile than the S&P 500. But over the long term it can also provide better returns, as the numbers near the top show.

Global superstar

The iShares Edge MSCI World Quality Factor also holds US tech giants including Nvidia and Microsoft. However, it provides superior diversification to the other fund, helping investors spread risk more effectively.

As the name suggests, it holds stocks from across the world rather than just those in North America. Just over 77% of its capital is held in US shares, in fact.

It also provides more even exposure to other sectors, illustrated above. Other major holdings here include Visa, Costco, and Novo Nordisk.

One drawback is that this has produced a lower return than tech funds like the one described above. But then that 12%-plus average return since 2019 is still a pretty decent return, in my opinion.

And the prospect of lower returns may be a price worth paying for better diversification to some investors.

Euro star

The iShares Core EURO STOXX 50 may have delivered a worse return than those other funds since 2019. But I don’t think an average 8%-plus shouldn’t be sniffed at! And I think it could provide much stronger returns over the next five years.

This is because of the underperformance of European shares in recent times relative to their US counterparts. It’s a lag that could, as we saw in 2024, could pave the way for exceptional capital gains from this point.

This fund also invests across a multitude of sectors. Major holdings here include semiconductor maker ASML, software provider SAP, and luxury goods specialist LVMH. In total, it holds 50 stocks, providing solid diversification.

Be aware, though, that political turbulence in much of Europe could dent future returns.

The post Want to double your money by 2030? Here are 3 ETFs to consider in January! appeared first on The Motley Fool UK.

Invesco EQQQ Nasdaq 100

What it does: This ETF tracks the Nasdaq 100 index, which represents the largest 100 non-financial companies on the Nasdaq Stock Exchange.

By Harshil Patel. The Invesco EQQQ Nasdaq 100 ETF (LSE:EQQQ) might sound like a mouthful, but it offers a simple way to own the largest growth shares.

In fact, it’s one of the largest individual holdings in my Stocks and Shares ISA. In recent years, it has become dominated by the global tech giants.

25% of the fund is invested in Apple, Microsoft and Nvidia. A further 25% of the fund is invested in Amazon, Broadcom, Meta, Tesla, Costco and Alphabet.

I find this ETF an efficient and low-cost way to own these tech heavyweights.

Performance has been stellar in recent years. For instance, over the last five years it gained 125%. And over the past decade, it’s up by a whopping 460%.

This far exceeds that of the S&P 500 and FTSE 100.

But note that returns in the Nasdaq 100 can be more volatile. In the most recent downturn in 2022, it fell by 26% vs a 10% decline in the S&P 500.

Harshil Patel owns shares in Invesco EQQQ Nasdaq 100 ETF .

iShares Core EURO STOXX 50 EUR 

What it does: the ETF tracks the performance of a diversified index made up of the 50 largest companies in Europe

By Gordon Best. I’m a big fan of investing in markets which may be undervalued. Europe has stood out to me in recent years as a region with plenty of uncertainty, but just as much quality too. iShares Core EURO STOXX 50 EUR (LSE:EUE) tracks 50 of the largest stocks across the Eurozone. It offers diversification across various sectors, including financials, consumer goods, and technology.

Of course, the European market maybe isn’t quite as dynamic as many companies in the US, but with very solid growth numbers, and experienced management, it could well capitalise on the same trends. With specialist semiconductor companies like ASML, the same growth as US companies could be seen, but as a much more reasonable valuation. 

I do have some concerns though. A strong Dollar can severely impact European companies operating in other currencies, plus there is a constant risk from geopolitical escalation as the conflict in Ukraine continues.  

Gordon Best owns shares in iShares Core EURO STOXX 50 EUR.

iShares Edge MSCI World Quality Factor ETF

What it does: The iShares Edge MSCI World Quality Factor ETF seeks to track the performance of an index composed of stocks with strong and stable earnings.

By Paul Summers. To say that I like the iShares Edge MSCI World Quality Factor ETF (LSE: IWFQ) is putting it mildly. It’s easily the biggest holding in my Stocks and Shares ISA. 

With a portfolio including the usual tech suspects as well as pharma giant Novo Nordisk, this $4bn passive vehicle has returned almost 80% in the last 5 years (at the time of writing).

The ETF focuses only on ‘quality’ stocks with track records of high returns on equity, stable earnings growth and sound finances. In other words, it avoids owning the dross. 

None of this comes free but the ongoing charge of 0.3% is reasonable compared to actively-managed funds with the same objective. 

My only real concern is that 70% of the portfolio is devoted to US stocks. With the election coming next month, there could be a bit of volatility on the cards. 

Paul Summers owns shares in iShares Edge MSCI World Quality Factor ETF.

L&G Cyber Security UCITS ETF

What it does: L&G Cyber Security ETF is made up of cybersecurity stocks and tracks the ISE Cyber Security UCITS Index.

By Ben McPoland. Warren Buffett said something really interesting a few months ago. He predicted that AI-enabled scamming is going to be “the growth industry of all time“. 

I think he’s right. As well as tricking people, AI can be used to create malware that adapts its behaviour to avoid detection by traditional antivirus software.

This is partly why I have the L&G Cyber Security ETF (LSE: ISPY) in my ISA. The ETF holds a basket of cybersecurity giants, including Palo Alto Networks and CrowdStrike.

Barely a week goes by nowadays without some major hacking incident. So this investment offers me thematic exposure to an industry that research firm McKinsey thinks could one day be worth $1.5trn.

Naturally, the ETF is closely tied to the performance of certain cybersecurity companies. These may face hacks, innovation challenges, or competitive pressures.

But since launch in 2015, the share price is up around 150%. I expect it to continue climbing over time as earnings in the cybersecurity sector grow.

Ben McPoland owns shares in CrowdStrike and L&G Cyber Security UCITS ETF. 

VanEck Semiconductor ETF

What it does: The ETF invests in the 25 largest US-listed companies producing semiconductors, or semiconductor equipment. 

By Dr James Fox. The semiconductor sector is fast-moving with consistent technological developments and innovation cycles. In fact, this fast-paced environment can make it challenging for shareholders to stay updated on the latest developments and trends.

So, while I do invest in individual semiconductor stocks, an ETF which invests in the 25 largest US-listed companies producing semiconductors, or semiconductor equipment allows me to spread risk and hedge my bets. 

The VanEck Semiconductor ETF (NASDAQ:SMH) has performed very well in recent years, up 46% over 12 months and 269% over five years. However, potential investors may be intrigued to see that the share price has pulled back in recent months. 

This does create an interesting entry point, but also reflects the constantly shifting sentiment relating to artificial intelligence and data centres – these sectors have driven demand for high-end chips over the past 18 months – which may represent a risk. 

Personally, I’m looking beyond the near-term volatility and thinking about where this stock could be in a decade as our economies become increasingly reliant on semiconductor technology. 

James Fox owns shares in VanEck Semiconductor ETF

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