Certain ASX-listed exchange-traded funds (ETFs) could make great investments with how much capital growth they could deliver.
One of the funds that I think many investors underestimate, or may not even know about, is iShares Global 100 AUD ETF (ASX: IOO).
It’s a fund that invests in 100 of the largest businesses on the global stock market. I think it could be a very compelling investment for a few different reasons.
Great holdings
By only investing in 100 of the largest, multi-national blue-chip companies that are important to global equity markets, I think the resultant portfolio is high-quality with a lot of great businesses.
Some of the companies in the portfolio include Nvidia, Apple, Microsoft, Amazon.com, Alphabet, Broadcom, JPMorgan Chase, Samsung Electronics, Eli Lilly, Johnson & Johnson and ASML.
The businesses in the portfolio are among the best in the world at what they do, generating excellent profit margins and impressive earnings growth over time.
The best companies across the world tend to have a habit of continuing to win, which makes me believe this group of companies can deliver strong returns.
Diversification
The ASX ETF’s portfolio is diversified in a number of ways, giving investors a pleasing way to reduce risk without necessarily reducing returns.
It’s invested across a variety of sectors, though IT with a 46% weighting is the largest allocation. Other industries with a weighting of more than 5% include financials, communication, healthcare, consumer discretionary and consumer staples.
These businesses also come from across the world, including the US, the UK, Switzerland, Germany, South Korea, France, Japan and the Netherlands.
Compelling returns
The IOO ETF has performed strongly for investors over the last few years. With how large businesses tend to be able to continue gathering power and market position, I think there’s a good chance they can continue to perform long into the future.
The ASX ETF has delivered an average return per year of 15.9% in the last five years. Past performance is not a reliable indicator of future returns when we’re talking about mid-teen returns, but I’m optimistic about what it can do well over the long-term.
I think it could perform just as well as many of the good ASX growth shares.
