2 excellent ETFs with compelling potential

Exchange-traded funds (ETFs) could be a compelling way for investors to gain access to some great businesses but to do it in a diversified way.

Some ETFs are focused on a particular share market – like the Australian share market or European share market. But, there are other options that give the opportunity to invest in certain sectors or themes.

With that in mind, these two ETFs could be long-term options:

Vanguard MSCI Index International Shares ETF (ASX: VGS)

This is an ETF that is focused on the global share market. It has businesses from many different “major developed countries” in the portfolio. The US does represent 70% of the portfolio, though many US companies do earn international profit as well.

Readers may have heard of many of the biggest holdings in the portfolio including: Apple, Microsoft, Alphabet, Amazon.com, Tesla, Nvidia and Meta Platforms (formerly Facebook).

It’s not all tech giants – other US names include JPMorgan Chase, Berkshire Hathaway, Proctor & Gamble, Home Depot, Visa and Mastercard.

However, there are lots of non-US businesses in the portfolio too such as Nestle, ASML, Roche, LVMH, Toyota, Shell, Novartis, AstraZeneca, Novo Nordisk and Royal Bank of Canada.

There is a total of around 1,500 businesses in the portfolio.

The VGS ETF offers a globally diversified portfolio for an annual management fee cost of just 0.18%.

Past performance is not a guarantee of future results, however over the past five years the Vanguard MSCI Index International Shares ETF has produced an average return per annum of 15.2%.

However, the dividend yield of the ETF is just 1.6% according to Vanguard.

VanEck Video Gaming and Esports ETF (ASX: ESPO)

This ETF is much more concentrated than the Vanguard. It has a total of 26 positions that give investors exposure to the global gaming sector.

VanEck says that this industry is a dynamic growth opportunity, which gives investors the ability to invest in the future of gaming. The companies are positioned to benefit from the increasing popularity of video games and eSports.

Each of the businesses in the portfolio generate a significant portion of their revenue from the video gaming sector.

In terms of the biggest positions in the portfolio, these are some of the names: Tencent, Activision Blizzard, Nintendo, Nvidia, Advanced Micro Devices, Netease, Electronic Arts, Take-Two Interactive, Nexon and Bandai Namco. Ubisoft and Zynga are two of the other positions.

There is a mixture between countries – this ETF is much less focused on the US than the VGS ETF. The US is 40.4% of the portfolio, Japan is a 21.4% weighting, China is 20.1%, South Korea is 4.6%, Singapore is 4.2% and so on.

Since listing in September 2020, the ESPO ETF has produced an average return per annum of 8.5%. However, the index that it tracks has produced an average return of 29% per annum over the last five years. Past performance is not a reliable indicator of future performance though.

The post 2 excellent ETFs with compelling potential appeared first on The Motley Fool Australia.

More reading

• 3 excellent ETFs that you need to know about
• What’s going so wrong for ASX ETFs in 2022 so far?
• 2 quality ASX tech shares for investors after the selloff
• Is Vanguard MSCI Index International Shares ETF (ASX:VGS) an excellent investment for the long-term?
• 3 exciting ETFs for ASX investors next week

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has recommended VanEck Vectors ETF Trust – VanEck Vectors Video Gaming and eSports 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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