I’m very optimistic about these two exchange-traded funds (ETFs) because of their quality holdings and global portfolios.
I think most Aussies could do with diversifying their portfolios and making sure they have allocations to some of the best global businesses around.
There are some good businesses on the ASX, but the Australian share market only makes up around 2% of the global share market. The below two ETFs can help us get exposure to some of the other 98% of the global market and hopefully deliver good returns.
VanEck Morningstar International Wide Moat ETF (ASX: GOAT)
The aim of the GOAT ETF is to create a diversified portfolio of attractively priced global shares with wide economic moats. That means those companies have, in Morningstar’s opinion, sustainable competitive advantages that can last for 20 years or more.
In addition to that, the GOAT ETF only invests in these wide-moat companies at attractive prices relative to Morningstar’s estimate of fair value. There are currently 62 holdings in the portfolio.
While the management fee of 0.55% per year is somewhat high for an ETF, I think it’s reasonable considering the amount of underlying work that has gone into identifying high-quality businesses and ensuring those shares are bought at an appealing price.
Over the past ten years, the index that the GOAT ETF tracks has returned an average of 13.2% over the past decade. Time will tell what the next ten-year return is, but I think the portfolio is set up to do well.
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
The ETHI ETF gives people the option to invest in a portfolio of 200 ethical businesses.
The invstment process starts with the global share market and then makes a number of exclusions that are deemed “inconsistent with responsible investment considerations”.
For example, it cuts out businesses involved with fossil fuels, gambling, tobacco, weapons, animal cruelty, uranium and nuclear energy, alcohol producers and so on.
The largest 200 remaining businesses pass the screening tests, including Nvidia, Apple, Visa, Mastercard and Home Depot.
Over the past five years, the ETHI ETF has returned an average of 17.4% per year, though I wouldn’t expect the next five years to be as good because the level of share price performance of Nvidia which is unlikely to be repeated.
With an annual management fee of 0.59%, I think the costs are reasonable for how much effort has been put into the ethical considerations.
