The technology space has been hit heavily amid higher interest rates. But I think there are some leading ASX exchange-traded funds (ETFs) that could be exciting opportunities for a tech rebound.
When something falls by 50% from $100 to $50, it only needs to get back to $75 to generate a 50% return from that low starting valuation of $50.
I don't think interest rates are going to go back below 2% for the foreseeable future, perhaps for the rest of the decade. But, technology valuations now seem much more reasonable, so I think some of the beaten-up tech ETFs could perform well over the next year or two.
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Betashares Cloud Computing ETF (ASX: CLDD)
The Betashares Cloud Computing ETF unit price has fallen around 45% since November 2021. The idea of this ETF is to give investors exposure to the cloud computing trend. Betashares explains:
Cloud computing has been one of the strongest-growing segments of the technology sector, and given much of the world's digital data and software applications are still maintained outside the cloud, continued strong growth has been forecast.
A growing number of different services can now be provided online, giving the ASX ETF growing diversification. Looking at the biggest holdings, these are some of the largest positions: Coupa Software, Sinch, Five9, Workiva, Workday, Shopify and SPS Commerce.
With the collective valuations of the companies involved now much lower, I think this group of businesses could rebound nicely if investor pessimism starts fading when interest rates stop rising.
Betashares Nasdaq 100 ETF (ASX: NDQ)
The Betashares Nasdaq 100 ETF is another one that has fallen heavily – it's down around 30% since November 2021.
I think this ETF is invested in some of the highest-quality businesses in the world, they are global leaders in what they do. I'm talking about names like Apple, Microsoft, Alphabet, Amazon.com, Nvidia, PepsiCo, Costco, Cisco Systems, Intuitive Surgical and Moderna.
Interest rates have soared in the US to try to bring inflation under control in the country. An economic downturn may be on the cards. But, I don't think the outlook will always look this pessimistic, particularly when thinking about the long-term. I think this ASX ETF has an attractive future ahead.
When share prices drop heavily, there may be an important negative influencing event going on in the world. But that's when I think investors should become more optimistic about investing and making long-term returns. Be greedy when others are fearful, as the saying goes.
There won't be many times when the Betashares Nasdaq 100 ETF drops by 30%, so I think this could be a good time to invest and then be patient after that.
