One of the head-scratchers for investors in FY22 was seeing ASX renewable shares fall in value while households struggled with rising electricity prices. And all during a significant period for the climate change movement as governments around the world commit billions to renewables projects.

That doesn’t make sense, right?

Why did ASX renewable shares fall last year?

Wentworth Williamson analyst Martin Marais sums up the problem. He says the renewables industry is currently “incapable of rapidly ramping up production after years of underinvestment”.

As a result, “the supply/demand imbalance may take many months, if not years, to fix”.

Although climate change is firmly on the agenda in most western nations today, that doesn’t mean the renewables sector is in a position to respond to it immediately.

Some of the businesses we refer to as ASX renewable shares are brand new companies, while others are existing energy providers. Both are having to spend oodles of cash to build their renewable energy offerings to meet this sudden demand.

A ramp-up in costs isn’t so good when there isn’t yet corresponding revenue growth to offset it. And that means profit warnings, according to RC Global chief investment officer Roy Chen.

In a recent article in the Australian Financial Review (AFR), Chen said:

There are some of these clean energy companies that have issued profit warning after profit warning, and warned profit margins could even turn negative because costs are becoming so much.

These are some of the factors making market watchers a bit wary of ASX renewable shares for now.

A snapshot of falling prices in FY22

For this article, we’re defining ASX renewable shares as companies producing clean power. Let’s take a look at how some of the big players did in FY22.

• The Contact Energy Limited (ASX: CEN) share price dropped 14.5% in FY22
• The Meridian Energy Ltd (ASX: MEZ) share price fell 15% in FY22
• The Mercury NZ Ltd (ASX: MCY) share price tumbled 32% in FY22
• The Infratil Ltd (ASX: IFT) share price lost 6%. (Infratil isn’t a power producer but it’s a major investor in green energy assets with a market cap of $5 billion. So, it’s worth including here)
• Genesis Energy Ltd (ASX: GNE) shares fell 24.5% in value in FY22.

There’s no index for ASX renewable shares but the VanEck Global Clean Energy ETF (ASX: CLNE) provides a good proxy. Units in the exchange-traded fund lost 22% in value during FY22.

The post Why did ASX renewable shares fall while electricity prices increased in FY22? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX shares today
• Here are the top 10 ASX shares today
• Here are the top 10 ASX shares today
• Here’s why ASX renewable shares slipped in June

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Telstra Corporation Ltd (ASX: TLS) share price is on the move on Thursday morning.

At the time of writing, the telco giant’s shares are up slightly to $3.91.

Why is the Telstra share price rising?

Investors have been bidding the Telstra share price higher in response to the release of an announcement this morning.

According to the release, following receipt of all necessary government and regulatory approvals, Telstra has completed the acquisition of Digicel Pacific.

Digicel Pacific is the leading provider of communications services across Papua New Guinea, Fiji, Nauru, Samoa, Tonga and Vanuatu. At the last count, the company had around 2.8 million subscribers and generated US$466 million in service revenue from them during the financial year ended 31 March 2022.

How much is Telstra paying?

While the acquisition of Digicel Pacific will cost a total of US$1.6 billion, Telstra will only be contributing US$270 million. The remaining US$1.33 million is being covered by the Australian Government through Export Finance Australia via a combination of non-recourse debt facilities and equity like securities.

Despite this, Telstra will own 100% of the ordinary equity in Digicel Pacific.

The telco giant also notes that it is expecting Digicel Pacific depreciation and amortisation, including purchase price amortisation arising from the transaction, of around US$160 million per annum.

Management commentary

Telstra’s CEO, Andrew Penn was pleased with the acquisition.

We are very pleased the deal has completed and we welcome Digicel Pacific to the Telstra family. We have been working closely with Pacific Governments on this acquisition and we’d like to thank them for their cooperation and support. We look forward to continuing to work with them as we operate Digicel Pacific and strengthen our relationships in the region.

The post Telstra share price higher on Digicel Pacific acquisition completion appeared first on The Motley Fool Australia.

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• How much has the Telstra share price paid in dividends over the last 5 years?
• Is the Telstra share price an opportunity calling in FY23?
• Here are 2 quality ASX dividend shares to buy according to experts
• Own Telstra shares? Here are details on the telco’s 2,000 new Australian call centre workers
• How big will the Telstra dividend yield be in FY23?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Pilbara Minerals Ltd (ASX: PLS) share price is under pressure on Thursday morning.

In morning trade, the lithium miner’s shares are down 1.5% to $2.32.

Pilbara Minerals share price falling?

Investors have been selling down the Pilbara Minerals share price this morning following the release of the company’s latest lithium auction update.

According to the release, the company has recorded its first decline in lithium price received since the battery materials exchange (BMX) auctions began.

Last month, Pilbara Minerals advised that it had accepted a pre-auction offer of US$6,350 per dry metric tonne (dmt) on a 5.5% lithia basis for 5,000dmt. This was a new record high and equates to an approximate price of US$7,017 per dmt on a 6% lithia basis.

What’s the latest?

Today’s update reveals that Pilbara Minerals received strong interest in both participation and bidding by a broad range of qualified buyers with a total of 41 bids received online during the 30-minute auction window.

However, despite this strong interest, the price received from its BMX auction has edged lower for the first time.

The company advised that it intends to accept the highest bid of US$6,188 per dmt on a 5.5% lithia basis for another 5,000dmt cargo of the lithium for delivery in late August. This equates to a price of ~US$6,841 per dmt on a 6% lithium basis, which is down 2.5% month on month.

Investors may believe this is a sign that lithium prices have now peaked.

Though, it is worth remembering that this is still materially higher than this time last year. As a result, this bodes well for Pilbara Minerals’ cash flow generation and bottom line.

The post Pilbara Minerals share price drops on latest BMX lithium auction update appeared first on The Motley Fool Australia.

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More reading

• 3 ASX lithium shares that flew in FY22, and 1 that sank
• Here are the top 10 ASX shares today
• Why has the Pilbara Minerals share price shot up 5% today?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Here are the 3 most heavily traded ASX 200 shares on Tuesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Liontown Resources Ltd (ASX: LTR) share price powered home in FY22 with a 30% gain for the year.

Now that we’ve rolled over to FY23, trends have shifted and Liontown shares are now 15% down in the past month.

Before the open on Thursday, the Liontown share price was resting at 94.5 cents.

Liontown share price set to roar in FY23?

Analysts are bullish on Liontown’s prospects this financial year and reckon the ASX lithium share is a buy.

Bell Potter recently said Liontown was one of its top lithium picks for FY23. The broker values Liontown shares at $3.06 apiece.

Four analysts covering Liontown rate the share a buy right now, according to Refinitiv Eikon data. There is just one hold rating and no sell ratings.

From this list, the consensus price target for Liontown is $2.08 per share. That means, on average, analysts tip it to deliver more than 120% upside in the next 12 months.

Meanwhile, if company earnings estimates among ASX lithium shares are anything to go by, it appears that the lithium sector is set to continue growing in FY23.

Analysts at Macquarie are bullish on the sector, pricing in earnings growth for Liontown’s peers, Pilbara Minerals Ltd (ASX: PLS) and Allkem Ltd (ASX: AKE).

The broker rates all three shares a buy, with an average 86% upside price target across them.

With that in mind, analyst sentiment is certainly positive on Liontown’s growth prospects and potential share price appreciation.

Liontown has clipped a 26% gain in the past 12 months. This is despite incurring a 43% loss this year to date.

The post What’s the outlook for the Liontown Resources share price in FY23? appeared first on The Motley Fool Australia.

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More reading

• Why are these ASX 200 lithium shares tumbling today?
• ASX battery metals shares trying to power up after a horror June
• Here are the top 10 ASX shares today
• Liontown Resources roared home with a 30% gain in FY22
• Can ASX lithium shares recharge in FY23?

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When it comes to consumer staples shares and the role they can play in one’s ASX share portfolio, one word probably comes to mind: defensive. When we hear investors discuss consumer staples shares, it normally involves the idea that these companies can protect an investor’s portfolio from volatility and capital loss.

That’s because consumer staples are goods and services that we all need, rather than want. They include food, drinks, household essentials, and vices like alcohol and tobacco.

But, like all assumptions in the world of investing, this might not always be the case. So let’s see if this reputation still holds water after what has been an especially tough year so far for investors in 2022 by checking out the iShares Global Consumer Staples ETF (ASX: IXI).

This exchange-traded fund (ETF) is the only one on the ASX that solely holds shares in the consumer staples sector. But not just ASX consumer staples shares though. IXI holds a basket of underlying companies that hail from the United States, the United Kingdom, Switzerland, Japan and France, amongst others.

But Australia is also included, with IXI holding ASX shares like Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Endeavour Group Ltd (ASX: EDV).

But even though most of IXI’s holdings are outside the ASX, you might still be very familiar with some of its top companies. These include Coca-Cola Company, Nestle, PepsiCo, Philip Morris International, Walmart and Unilever.

Has the Consumer Staples ETF protected investors’ portfolios in 2022?

So let’s look at how the iShares Consumer Staples ETF has held up in 2022 so far. So 2022 has been a very rough year for ASX shares. As it currently stands, the S&P/ASX 200 Index (ASX: XJO) remains down by a painful 11.1% in 2022 thus far.

It’s even worse over in the United States. The S&P 500 Index (INDEXSP: .INX) remains down by around 20% year to date.

So how has the IXI ETF fared? Well, over 2022 thus far, the IXI unit price has lost just 3.81%, falling from $88.72 a unit to the $85.34 the ETF closed at yesterday.

Not only that, but investors have also received two dividend distribution payments over 2022 thus far. These amount to $1.73 in distributions per unit. That translates into a trailing yield of just over 2%, bringing this ETF’s 2022 losses even lower

So IXI may have had a disappointing performance over 2022 thus far. But it has still outperformed the ASX 200 by more than 7%, and the S&P 500 by far more than that.

So it seems that in this case, the reputation of consumer staples shares as defensive portfolio protections against market losses and volatility remains intact.

The post Has the iShares Consumer Staples ETF protected investors’ portfolios in 2022? appeared first on The Motley Fool Australia.

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More reading

• Here are 3 ETFs for ASX investors to buy in FY23
• Here are 2 top ETFs for ASX investors next week
• 3 quality ETFs for ASX investors to buy next week

Motley Fool contributor Sebastian Bowen has positions in Coca-Cola, PepsiCo Inc., Philip Morris International, and Walmart Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Philip Morris International and Unilever and has recommended the following options: long January 2024 $47.50 calls on Coca-Cola. The Motley Fool Australia has positions in and has recommended COLESGROUP DEF SET and iShares Global Consumer Staples ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Is Telstra Corporation Ltd (ASX: TLS) a compelling investment opportunity at today’s share price for FY23 and beyond?

As the biggest telecommunications business in Australia, Telstra has a large position in the market. However, ‘large’ doesn’t necessarily mean ‘better’ in terms of potential investment returns.

Over the past month, the Telstra share price has outperformed the S&P/ASX 200 Index (ASX: XJO) by about 2%.

Can this outperformance continue? No one has a crystal ball, but brokers like to estimate where they think a company’s valuation could be in 12 months from now with what’s called a ‘price target’.

Let’s look at where brokers think the Telstra share price could go over the next year.

Broker ratings on the Telstra share price

The Telstra share price was $3.90 at the market close on Wednesday.

The broker Ord Minnett currently rates Telstra a buy with a price target of $4.65. That means a possible rise of about 19%. Ord Minnett is also predicting earnings per share (EPS) growth in FY23.

Morgan Stanley also rates Telstra a buy or ‘overweight’ with a share price target of $4.60. This suggests a possible rise of about 18%. One of the things that the broker likes is the potential for 5G to win customers onto wireless home broadband. That’s where a home broadband connection powered by the NBN is replaced by a 5G-powered home internet connection.

The shift to the NBN hurt Telstra’s margins. Getting households onto 5G home internet would be helpful for margins because Telstra would be providing the connection.

What could drive Telstra’s earnings higher?

The Telstra share price could follow earnings. Rising profits could be helpful in several ways, including funding higher dividends.

The core tactics of the T25 strategy are cutting costs, delivering growth and “exceptional customer experiences”, and continuing network and tech leadership.

In terms of cutting costs, Telstra says it wants to reduce its net fixed costs by $500 million between FY23 and FY25.

There are five areas of the business that Telstra is focusing on to achieve its cost reduction targets.

Telstra wants to:

• “Significantly reduce its IT operating costs”, remove legacy systems, and consolidate platforms
• Transform the ‘Telstra enterprise’ customer value chain across the different processes
• Improve efficiencies in billing, assurance, and activation for customers
• Achieve further labour productivity across the ‘back of house’ and support areas
• Expand its productivity in sale costs, fixed costs, and capital expenditure.

Telstra earnings could also rise as the company increases its prices in line with CPI inflation. These increases could happen annually.

Dividend expectations

Morgan Stanley and Ord Minnett believe the telco giant will pay an annual dividend per share of 16 cents in FY23. This equates to a grossed-up dividend yield of 5.9%.

Telstra share price snapshot

Since the beginning of 2022, Telstra shares have fallen 7.6%. However, the ASX 200 has dropped 12.75%.

The post Is the Telstra share price an opportunity calling in FY23? appeared first on The Motley Fool Australia.

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More reading

• Here are 2 quality ASX dividend shares to buy according to experts
• Own Telstra shares? Here are details on the telco’s 2,000 new Australian call centre workers
• How big will the Telstra dividend yield be in FY23?
• Here’s why brokers rate these ASX dividend shares as buys
• Telstra share price in the red despite taking out green crown

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Shares in Allkem Ltd (ASX: AKE) managed to clip a 60% gain in FY22, despite incurring heavy losses at the back end of the period.

Our attention now turns to FY23 and there’s plenty of external forces that have just arrived on the doorstep of the ASX.

Allkem is at $9.64 per share ahead of the market open on Thursday, after sliding 6% in the past month.

What’s in store for Allkem in FY23?

ASX lithium shares are showing signs of strength in June. Allkem shares have rebounded off lows twice in the past two weeks as lithium prices remain high.

Long-term demand for lithium is tipped to remain strong by Shaw & Partners, potentially offering long-term upside for investors also.

UBS analysts have retained their buy rating. In a recent note, they valued the stock at $15.55 per share.

The UBS team is constructive on Allkem’s free cash flow projections and tips high lithium prices to underpin this.

Macquarie is also bullish on Allkem, valuing the shares at $17 with a buy recommendation. The broker is also constructive on the long-term lithium outlook.

This is certainly good for market sentiment on Allkem, that’s for sure.

In terms of coverage, 10 analysts rate Allkem a buy right now. Three brokers urge their clients to hold, according to Refinitiv Eikon data.

From this list, the consensus price target is $16, offering roughly $6.50 per share in upside potential.

While analysts are bullish, the market is dislocated from this view.

Investors have recently pushed the stock to three-month lows.

Despite this, the Allkem share price has increased by 32.8% over the past 12 months.

The post What’s the outlook for Allkem shares in FY23? appeared first on The Motley Fool Australia.

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• Why Allkem, Kogan, Metcash, and Sezzle shares are sinking
• Why are these ASX 200 lithium shares tumbling today?
• Is this a good time to go digging for ASX 200 mining shares for FY23?
• ASX battery metals shares trying to power up after a horror June
• Here are the top 10 ASX shares today

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Newcrest Mining Ltd (ASX: NCM) share price has continued to tread lower throughout the past month.

Over the past 30 days, the gold miner’s shares are down 18.2% to $18.99 apiece at yesterday’s market close.

This is a tad higher than the multi-year low of $18.97 reached yesterday afternoon.

Shares in Northern Star Resources Ltd (ASX: NST) have also declined by 14.1% over the same period. This is more in line with the benchmark S&P/ASX 200 Resources Index (ASX: XJR), which has dropped by 14.5%.

Evidently, Newcrest shares are among the worst performers in the sector of late.

Let’s take a look at what’s been taking the shine off this ASX gold mining stock.

Why is the Newcrest share price in a funk?

Extreme volatility mixed with investor concerns about further rate hikes by major central banks is impacting the Newcrest share price.

Inflation has been soaring as food and energy prices hit record highs.

In May, inflation rose by 8.6% in the United States, which was the highest level in the past four decades. That was eclipsed last night when the US announced inflation had rocketed to 9.1% in June.

This doesn’t bode well for gold prices, as it’s likely the Federal Reserve will again lift interest rates.

When this occurs, investors tend to shift their money into government bonds because they are perceived to be safe-haven assets.

The price of gold has declined by 4% over the past month to trade at about US$1,730 per ounce. This is the lowest level since August 2021, and a big fall from the US$2,070 it was fetching on 8 March 2022.

If interest rates continue to go up — in the US or here at home — investor appetite for gold could recede. This would likely pile further selling pressure onto Newcrest shares.

What do the brokers think?

A couple of brokers believe the Newcrest share price is currently a bargain.

According to ANZ Share Investing, UBS cut its price target on the company’s shares by 14.5% to $22.40 apiece. Despite the cut, that means there is still a potential upside of 18% for investors.

While the broker reduced its assessment of Northern Star as well, it still sees value in the gold miner.

JPMorgan also changed its outlook on Newcrest from overweight to neutral with a price target of $23.

Newcrest commands a market capitalisation of approximately $17.16 billion.

The post Why has the Newcrest share price lost its shine of late? appeared first on The Motley Fool Australia.

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More reading

• What’s the outlook for Northern Star share price in FY23?
• 5 things to watch on the ASX 200 on Wednesday
• Down 23% in June, can the Northern Star Resource share price go up in July?
• 2 ASX 200 gold mining shares getting plastered with new multi-year lows
• Is this a good time to go digging for ASX 200 mining shares for FY23?

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Aaron Teboneras has positions in Northern Star Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The world is currently enduring an economically unsettling time. So it’s more difficult than ever to pick winning ASX shares.

But one expert has identified a particular sector that seems to have just started a turnaround.

It’s such early days that investors could get in on the ground level if they act quickly.

Switzer Financial Group director Paul Rickard said this week that ASX shares in the healthcare industry have staged a remarkable comeback this month.

“I think the healthcare sector is going to do pretty well. In fact, it’s been doing well in the last four to six weeks.”

Indeed, the S&P/ASX 200 Health Care (ASX: XHJ) index is up 6.8% this month, after it plunged 12.4% from the start of the year to the end of June.

Banks and mining are shaky, and the money has to go somewhere

Rickard reckons the upward momentum will continue, due to several drivers.

The first is that there is nervousness about the two dominant industries on the ASX — banking and resources.

“Banks, there are question marks about whether high interest rates will really impact profits and bad debts in the long term,” said Rickard on Switzer TV Investing.

“In the resources sector people are still worried about commodity prices and the R word — recession — and what that might do.”

Another factor is that the Australian dollar is trading lower against the US dollar. Many ASX-listed healthcare companies generate the majority of their revenue from North America and elsewhere outside of Australia, and a weakening dollar makes their exports more competitive.

“Thirdly, we’re coming into reporting season, and healthcare companies have traditionally done really well in reporting season,” said Rickard.

“Companies like CSL Limited (ASX: CSL) have a great record of positive surprises.”

A recession-busting investment?

While CSL is the pick of the industry for Rickard, he named a couple of other ASX shares that could benefit from the healthcare comeback.

“There seems to be value in Resmed CDI (ASX: RMD), which is creeping up, and also Cochlear Limited (ASX: COH).”

Rickard added that healthcare products and services are fairly resilient against economic downturns or recession, and perhaps that’s what’s triggering the July comeback.

“I think there’s value in each of those health companies. Still trading on high multiples… but to me the stocks aren’t going down in price and I think that means they’re going to go up,” he said.

“I think there’ll be some good performance out of healthcare.” 

The post 3 ASX shares to buy in a sector suddenly soaring this month: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has positions in CSL Ltd., Cochlear Ltd., and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd., Cochlear Ltd., and ResMed Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed Inc. The Motley Fool Australia has recommended Cochlear Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Exchange-traded funds (ETFs) can be very effective to passively grow wealth over the long term. It can be hard to know which investments to go for, so buying a whole bunch of shares or other assets at once could make things easier.

But then there’s still the tricky decision of choosing which ETFs to go for.

There are some index funds that focus on a particular market such as the S&P/ASX 300 Index (ASX: XJO). This is tracked by the Vanguard Australian Shares Index ETF (ASX: VAS). But there are others that may be focused on particular attributes or offer wide diversification across different asset classes.

I think the two ETFs below offer investors a good combination of both diversification and growth potential.

Vanguard Diversified High Growth Index ETF (ASX: VDHG)

This ETF is probably one of the most diverse options on the ASX.

It offers “low-cost access to a range of sector funds, offering broad diversification across multiple asset classes”. It invests mainly in “growth assets” and is designed for investors with “a high tolerance for risk who are seeking long-term capital growth”.

It targets a 10% allocation to bonds and 90% to shares.

Bonds are essentially debt that governments and businesses use to fund their operations and projects. It’s essentially how many governments, such as Australia and the US, manage to keep operating and paying for things despite running budget deficits.

The bond funds that the VDHG ETF invests in are global bonds and Australian bonds.

In terms of the shares, just over a third of the VDHG ETF is invested in ASX shares, 5% is invested in ‘emerging market’ shares (think: India, Brazil etc.), 6.4% is invested in small international company shares, and the rest (around 42%) in larger international shares from ‘western’ markets.

As you can guess, the Vanguard Diversified High Growth Index ETF gives underlying exposure to many hundreds of businesses.

VanEck MSCI International Quality ETF (ASX: QUAL)

This investment is much more focused on shares. It owns shares in around 300 businesses that are listed around the world.

While around 75% of the allocation is to US shares, the following countries have weightings of more than 0.5%: Switzerland, the UK, Japan, the Netherlands, Denmark, Ireland, Canada, France, Sweden, and China.

However, aside from offering diversification, a key focus of this ETF is to invest in companies that score well based on three fundamental factors: high return on equity, stable year-on-year earnings growth, and low financial leverage.

In other words, the VanEck MSCI International Quality ETF is invested in businesses that earn good profit compared to how much shareholder money is in the business. They typically generate consistent profit growth, and they don’t have much debt.

While there are 300 holdings, the top ten positions make up 31.5% of the total allocation. Those high-quality names are: Microsoft, Apple, Johnson & Johnson, UnitedHealth, Nvidia, Meta Platforms, Alphabet (A and C class shares), Visa, and Nestle.

Despite the heavy decline in 2022, the QUAL ETF has delivered an average return per annum of 13.1% over the last five years, outperforming the MSCI World excluding Australia Index return of 10.1% per annum.

The post I think these 2 ETFs are long-term buys appeared first on The Motley Fool Australia.

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More reading

• Why analysts say these top ETFs are buys
• Expert names ASX share that could fly 67% higher
• Here are 2 buy-rated ASX ETFs for casting a wider net during uncertainty
• How did the Vanguard Australian Shares Index ETF perform in June?
• Here are 2 high quality ETFs analysts rate as buys

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Apple, Microsoft, Nvidia, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and UnitedHealth Group and has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Apple, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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