There are a few high-quality exchange-traded funds (ETFs) that could be worth holding for the long-term.
ETFs allow you to invest in many businesses at once with a single investment. They can be useful for providing diversification.
These two ETFs could be worth thinking about:
Vanguard Msci Index International Shares ETF (ASX: VGS)
This ETF is about giving investors exposure to the global share market, namely businesses which are listed in economically developed countries.
The biggest exposure it gives is to the largest companies. Vanguard aims to give broad diversification to a broad range of securities to participate in the long-term growth potential of international economies outside Australia.
To jump straight to the top 10 holdings of this ETF, those positions are: Apple, Microsoft, Amazon, Alphabet, Facebook, Tesla, Johnson & Johnson, JPMorgan Chase, Visa and Nestle.
Just over two thirds of the ETF is invested in the US. The other countries that represent more than a 1% position include Japan, the UK, France, Canada, Switzerland, Germany, Netherlands, Hong Kong and Sweden.
There’s more to the Vanguard MSCI Index International Shares ETF than just the top 10. It actually has over 1,500 positions. Looking at the sector allocation at the end of January 2021, IT had a 22.6% weighting, healthcare had a 13.3% weighting, consumer discretionary had a 12.3% weighting, financials had a 12.2% weighting and industrials had a 10.4%. All of the other sectors had weightings of less than 10%.
The ETF has an annual management fee of 0.18% per annum, it has produced net returns of 11.7% per annum over the last five years.
VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)
This ETF is about investing high quality businesses in the US.
In the portfolio are businesses that Morningstar have rated as having wide economic moats, or sustainable competitive advantages. The ETF only owns companies that Morningstar thinks are trading at good value compared to the equity research outfit’s estimate of fair value.
It has an annual management fee of 0.49%, which is cheaper than what plenty of active fund managers charge.
At the end of January 2021, its largest holdings were: John Wiley & Sons, Charles Schwab, Corteva, Cheniere Energy, Wells Fargo, Blackbaud, Intel, Bank of America, Biogen and Constellation Brands.
VanEck Vectors Morningstar Wide Moat ETF has produced returns strong than the S&P 500 over the last five years, producing average net returns per annum of 17.5%. The index that the ETF tracks has outperformed the S&P 500 over the last 10 years.
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More reading
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF and Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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