Look for cost-effective options when investing a tax refund: ETF Securities
Close to 10 million Australians received tax refunds worth an average of around $2,900 last year, according to the Australian Taxation Office, and a similar number can expect a refund this year. For many people receipt of a refund is an opportunity to top up their investment portfolios.
Many will get a bigger refund this year because the government increased the low- and middle-income tax offset by $420 for the 2021/22 tax year – the last year the offset is available.
ETF Securities Head of Distribution, Kanish Chugh, says a key consideration when investing a refund is to make sure the investment is as efficient and cost-effective as possible.
“A tax refund represents a return of some of our hard-earned income and we want to make sure that when we invest it, we get value for money,” Chugh said.
One low-cost way of investing a tax refund is to buy units in an exchange traded fund (ETF).
There are several tech ETFs that should be on investors’ radars, given the recent turnaround in that sector, notes Chugh.
ETFS FANG+ ETF (ASX Code: FANG) has picked up strongly after the big tech sell-off in the first half of the year. In July, FANG returned 9.2%.
The fund provides exposure to a portfolio of global leaders in tech and tech-enabled sectors. Top holdings include Tesla, Netflix, Amazon, Apple and Microsoft.
ETFS Morningstar Global Technology ETF (ASX Code TECH) has had a similar turnaround, after falling around 20% in the first half of the year, TECH was up 7.3% in July.
The fund provides exposure to leaders in global IT hardware, software and services. Holdings include industrial technology conglomerate Fortive Corp, WiseTech Global, NXP Semiconductors, software company Tyler Technologies and Microsoft.
ETFS Semiconductor ETF (ASX Code SEMI) has had an even bigger bounce, returning 12.3% in July. The fund holds leaders in the semiconductor value chain, including ASML, TSMC, Broadcom, NVIDIA and Texas Instruments.
Chugh added, “The long-term outlook for the leading tech stocks remains positive, as they continue to innovate. Short-term, there may be some ongoing volatility, given market noise around rising inflation and interest rates. But in the long term, these companies have very strong earnings.”
