There are some great opportunities opening up on the ASX share market, and April 2023 could be the month to jump on them.
During this period of uncertainty, I think it can make sense to go for diversified, quality options. There are individual ASX shares that could be great value today, and I’ll pick out some names in future articles.
For two of the ideas I’d want to invest in April are exchange-traded funds (ETFs).
Betashares Global Quality Leaders ETF (ASX: QLTY)
The global share market has numerous businesses, but I’d only want to invest in the quality ones. How to judge quality? Investors can do it in a number of different ways.
This ETF is invested in 150 global companies outside of Australia that rank highest on four key factors: return on equity, debt-to-capital, cash flow generation ability and earnings stability. That suggests the profit that the business makes is impressive compared to how much shareholder money is invested in the business, they have low debt and make a lot of profit in cash terms.
The holdings are largely similar weightings. But, some of the largest holdings include: Nvidia, Novartis, Meta Platforms, Adobe, Tesla, Alphabet, Microsoft and L’Oreal.
Despite all of the interest rate problems, which have hurt a number of ASX shares, the Betashares Global Quality Leaders ETF has returned an average of 11% per year since November 2018.
I think it can continue to do well because of the metrics that are used to build the portfolio.
VanEck Morningstar International Wide Moat ETF (ASX: GOAT)
One of the most effective ways to invest, I think, is to find businesses that have competitive advantages which can fight off competitors.
Those advantages, or economic moats, can come in many forms, such as the brand, patents and so on. Apple is a good example of that sort of business – consumers love the brand, and some parts of its technology would be very difficult to copy/beat. I love finding ASX shares with competitive advantages.
VanEck Morningstar International Wide Moat ETF is invested in businesses where it’s believed that the competitive advantages could be sustained for 20 years or more.
Target companies must be trading at attractive prices relative to Morningstar’s estimate of fair value to enter the portfolio, which currently has 74 positions as at 28 March 2023. The biggest five positions are Sanofi, Fortinet, Safran, ASML and London Stock Exchange.
The index that this ETF tracks has delivered an average return per year of 12.3% over the prior five years. If it can keep making those sorts of returns, it’ll do very well.
