5 surprising things you can invest in with ETFs

When you mention ETFs, most people think of the ASX 200 or US shares. But the ETF market has evolved well beyond traditional sharemarket indexes. 

There's an ETF for just about anything these days, giving investors a relatively simple way to gain exposure to specific industries, technologies and long-term trends. It's one of the reasons ETFs have become so popular with Australian investors.

Let's take a look at some of the surprising areas you can now invest in through ETFs.

1. Video games

Gaming is no longer just a niche hobby. It has become one of the world's largest entertainment industries, generating more revenue globally than movies and music combined.

Investors who want exposure to the sector can access ETFs such as the VanEck Video Gaming and Esports ETF (ASX: ESPO) or the Betashares Video Games and Esports ETF (ASX: GAME).

These ETFs invest in companies involved in game development, gaming hardware and esports. Holdings can include global names such as Nintendo, Roblox and Electronic Arts.

ETFs like these can appeal to investors who believe gaming will continue to grow as technology improves and audiences expand. But they can also be volatile. Both funds have experienced negative returns over the past 12 months, even though their longer-term returns remain stronger.

2. Lithium and battery technology

The rise of electric vehicles and renewable energy has driven growing demand for lithium and battery technology.

That has led to growing interest in ETFs such as the Global X Battery Tech & Lithium ETF (ASX: ACDC), which provides exposure to companies involved in lithium mining, battery production and energy storage technology.

Battery technology remains one of the biggest long-term investment themes, supported by the growth of electric vehicles, renewable energy and battery storage. The sector has also enjoyed a strong run over the past 12 months as lithium prices rebounded.

And it's not just electric vehicles driving growth anymore. The rapid rise of artificial intelligence and data centres is also increasing the need for energy infrastructure and battery storage.

3. Cybersecurity

As more of our lives move online, cybersecurity has become a major focus for businesses and governments worldwide.

Cyber attacks, ransomware and data breaches have increased demand for digital security services, creating another theme investors can access through ETFs.

The Betashares Global Cybersecurity ETF (ASX: HACK) and Global X Cybersecurity ETF (ASX: BUGG) are examples available on the ASX.

These ETFs invest in companies involved in network security, cloud protection and digital identity management.

Cybersecurity is increasingly viewed as an essential ongoing expense for organisations operating in a digital world. However, like many thematic technology investments, these ETFs can still be volatile and both have experienced negative returns over the past 12 months.

4. Robotics and automation

Robots are no longer limited to car factories or science fiction films. Automation is increasingly being used across manufacturing, logistics, healthcare and warehousing.

Some investors see robotics as a long-term trend driven by rising labour costs, ageing populations and advances in technology.

ETFs in this space include the Global X ROBO Global Robotics & Automation ETF (ASX: ROBO) and the Betashares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ). 

These funds may include businesses involved in industrial robotics, automation software and autonomous systems.

For investors, the appeal is getting exposure to a broad global trend without needing to research dozens of specialist companies individually.

Both ETFs have enjoyed a strong run over the past 12 months as investor interest in artificial intelligence and automation has grown.

5. Artificial intelligence chips 

Artificial intelligence may dominate headlines, but behind the scenes much of the attention has flowed to the semiconductor companies making the advanced chips powering the technology.

These chips are essential for AI systems, cloud computing, gaming and modern data centres, helping fuel strong investor interest in semiconductor ETFs.

The Global X Semiconductor ETF (ASX: SEMI) is one ASX-listed option that gives investors exposure to some of the world's largest semiconductor companies. 

The ETF has enjoyed an exceptionally strong run over the past 12 months as demand for AI infrastructure and advanced chips has surged.

The bigger picture

The rise of thematic ETFs highlights how much the investment landscape has changed in recent years. Investors are no longer limited to broad sharemarket indexes or traditional sectors.

That flexibility can be appealing, especially for investors looking to tap into long-term trends and emerging industries. But it is important to remember that thematic ETFs can be more volatile than diversified broad-market funds.

Many thematic ETFs focus on narrow sectors or emerging technologies, which means returns can swing sharply from year to year depending on market conditions and investor sentiment.

For that reason, thematic ETFs are often best used as smaller "satellite" holdings alongside a diversified core portfolio rather than as a complete investment strategy.

Still, for investors looking beyond broad market exposure, there's now an ETF for far more than many people realise. 

Several of the ETFs mentioned in this article are available through InvestSMART Custom, which allows investors to personalise their ETF portfolio from an approved list of ETFs.