I’m a big believer in making things simple with investing. Exchange-traded funds (ETFs) enable investors to buy a fund of assets through just one investment on the ASX.
Investors are typically charged less by ETF providers than active fund managers. Fees aren’t everything. I think net returns are the most important thing – that’s the return after fees and so on.
After a recent decline, I think both of these ETFs look good for the long-term.
Betashares Climate Change Innovation ETF (ASX: ERTH)
This ETF owns a portfolio of 100 businesses that make at least 50% of their revenue from products and services that address climate change and other environmental problems through the reduction or avoidance of CO2 emissions.
Betashares says this covers clean energy providers, along with leading companies tackling green transport, waste management, sustainable product development, and improved energy efficiency and storage.
I think this ETF looks much better value after falling 28% in 2022 to date. This ETF is exposed to the decarbonisation trend, which could see hundreds of billions of dollars spent on making the world ‘greener’ in the coming decades.
Some of the biggest positions in the portfolio include: Enphase Energy, Trane Technologies, Eaton Corp, Tesla, Ecolab, American Water Works, Nio, Vestas Wind Systems, Samsung and East Japan Railway.
In my opinion, the big dip of the price of the ERTH ETF makes it a leading investment contender.
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
I think this could be one of the most interesting ETFs to follow over the next couple of years.
It’s focused on US shares that are believed to be good value and have the ability to keep generating good profits thanks to competitive advantages. That can come in the form of things like intellectual property and network effects.
Morningstar analysts only add businesses to the portfolio if they think that it’s priced at an attractive price to what’s calculated as the fair value. In other words, analysts might have identified company A as being an impressive business with long-term potential, but if they think company A’s fair value is $10 and the share price is $9.98, then that’s not cheap enough to invest in.
Past performance is definitely not a reliable indicator of future performance. However, the MOAT ETF has returned an average of 15.7% per year over the past five years.
Some of the biggest positions at the end of September were Biogen, Etsy, MercadoLibre, Tyler Technologies, Gilead Sciences and Workday. However, these top holding names are likely to change in the coming weeks or months.
