Exchange-traded funds (ETFs) are a great investment tool, allowing people with no investment experience at all to (almost) match the returns of the market/the benchmark.
ETFs come with a fee, which is usually very reasonable, and are paid from the fund balance – we don’t have to pay for it from our bank accounts.
It’s perfectly possible to just own ETFs as the only investment and do very well.
VanEck Morningstar International Wide Moat ETF (ASX: GOAT)
This ETF is very similar to the Vaneck Morningstar Wide Moat ETF (ASX: MOAT), though GOAT invests in a global portfolio not just a portfolio of US shares.
The concept is that it invests in businesses that have durable competitive advantages that are expected to last for at least two decades.
I’ve invested in this one because I like businesses that are expected to thrive for a long time. On 7 December 2023, its biggest investments were US Bancorp, Charles Schwab, Masco, Elekta, Anheuser-Busch Inbev and Nike.
Plus, it only invests in these businesses when they’re trading at a good value compared to what Morningstar thinks is undervalued. It currently has 58 holdings.
It doesn’t have much of a dividend yield, but I’d prefer capital growth from an ETF because there are no franking credits from foreign companies.
With this, I’m already buying it and planning to hold forever.
Betashares Global Quality Leaders ETF (ASX: QLTY)
This is another ETF that is invested in a global portfolio of around 150 names from different countries, though the US is the biggest allocation.
There are four key factors that companies are ranked on – return on equity (ROE), debt to capital, cash flow generation ability and earnings stability. When you put those elements altogether, you’re left with a strong business on paper which should do well, in theory. A whole group of them could do well, and is diversified.
Despite the much higher interest rates, the QLTY ETF has delivered an average return per annum of 14% over the past five years, which is a solid return.
Its biggest positions are currently UnitedHealthb, Microsoft, L’Oreal, ASML, Metal Platforms and Adobe.
