There are some wonderful exchange-traded funds (ETFs) available for Aussies to buy for diversification and long-term returns.
With so much uncertainty around, I’d want to look at things that can provide exposure to different businesses and growth than what the S&P/ASX 200 (INDEXASX: XJO) is focused on.
Betashares Global Quality Leaders ETF (ASX: QLTY)
There are meant to be 150 businesses listed in a variety of countries such as the US, Japan, the Netherlands, France and Denmark.
Businesses selected for this portfolio need to have a strong combined ranking based on four key factors: return on equity (ROE), debt to capital, cashflow generation ability and earnings stability.
That means the balance sheet is strong, there’s good cash coming through the bank account, it has a small amount of debt, earnings are stable, and it makes good profit for how much shareholder capital is invested in the business.
It has an annual management fee of 0.35% and since it started in November 2018 the net returns have been an average of 14% per year. It has been solid, and these quality businesses could keep doing well, even if economic conditions are unsettled.
VanEck Morningstar Australian Moat Income ETF (ASX: DVDY)
There are plenty of quality, attractive businesses on the ASX, but we don’t have to look at the absolute largest ASX shares to find the best dividend opportunities.
This ETF is designed to own dividend-paying quality ASX companies. The portfolio is made up of 25 holdings that are expected to earn “excess profits” over a long period of time, and also be distant to going out of business.
At the end of September, these were some of the largest positions: AUB Group Ltd (ASX: AUB), Computershare Ltd (ASX: CPU), Wesfarmers Ltd (ASX: WES), Bapcor Ltd (ASX: BAP), Deterra Royalties Ltd (ASX: DRR), McMillan Shakespeare Ltd (ASX: MMS) and Jumbo Interactive Ltd (ASX: JIN).
Excluding franking credits, the DVDY ETF had a dividend yield of 4.3% over the past 12 months.
