ASX-listed exchange-traded funds (ETFs) can be some of the best investments that Australians can make thanks to both the diversification and returns they can provide.
Here’s what’s really appealing about the below two funds.
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
In a rapidly changing world, where business models and economies are shifting as some tech businesses rise and others fall, it could be a good idea to look at names that are likely to have the longevity to make good long-term profits.
The MOAT ETF’s analyst team hunt for opportunities where they think a company’s competitive advantages can last for many years to come. To earn a ‘wide moat’ rating, analysts think the economic moat will probably last 20 years or more.
Competitive advantages are essential for a company to stay ahead of competition and protect their market share and profit margins.
Added to that, the MOAT ETF just invests in these long-term businesses when they’re trading at a good price.
Over the last 10 years, the fund has returned an average of 13.9% per year, which is a strong level of growth.
Some of its current largest positions include Fortinet, Nxp Semiconductors and Nvidia. It currently has 57 positions in the portfolio, which I think is ample diversification.
Betashares Global Quality Leaders ETF (ASX: QLTY)
The other fund I want to highlight is the QLTY ETF, which owns 150 global companies, which are ranked by the highest quality score.
How does the fund choose what’s quality? It has chosen four metrics that can be measured, making it easy to compare and rank companies.
Those four metrics include return on equity (ROE), debt to capital, cash flow generation ability and earnings stability.
Each of those characteristics individually is a pleasing factor for a business, so when you put them all together, and choose the best-rated businesses in the world, it’s a powerful combination.
We can see the quality in the returns it has generated – since inception in November 2018, the QLTY ETF has returned an average of 12.9%.
This is the sort of investment that could deliver great returns over the long-term while also providing great diversification because it’s a global portfolio, with the picks from multiple countries.
Some of its largest holdings include Cisco Systems, Lam Research, UnitedHealth, Applied Materials, Alphabet and Tokyo Electron. These are seemingly some of the great businesses in the world, right now.
