Exchange-traded funds (ETFs) might be the best way to invest for the long-term if you’re not sure how to find good value growth shares, particularly in this era of sky-high valuations.
ETFs can give us exposure to shares that aren’t on the ASX, which I think is very useful considering the ASX is only 2% of the global share index.
With that in mind, here are two ETFs to consider:
Vanguard MSCI Index International Shares ETF (ASX: VGS)
It’s hard to know which business is the best one to invest in, it might even be difficult to decide which country you want to start investing in.
The simplest place to start could be this Vanguard MSCI International Index. Vanguard is a world leader in offering low-cost investment options.
The ETF is invested in nearly 1,600 shares across the world, giving it enormous diversification. You are truly invested across the entire world with share representation from the US, Japan, the UK, France, Canada, Germany, Switzerland, Hong Kong, the Netherlands, Spain and so on.
Industries like IT, Financials, Health Care, Industrials and Consumer Discretionary are all well represented in the portfolio with more than 10% of the ETF allocated.
Its top holdings are very recognisable global businesses like Nestle, Visa, Facebook, Alphabet, Amazon, Microsoft and Apple.
With an annual management fee of only 0.18% per annum, it’s a great way to invest in the entire global share market.
BetaShares Asia Technology Tigers ETF (ASX: ASIA)
Two of the main issues with the Vanguard MSCI ETF is that it provides little exposure to Asia (for now) and that its allocation to the main growth industry (tech) is quite low. Therefore, the BetaShares Asian Technology ETF could be a way to counter those two problems.
This ETF is invested in 50 of the leading technology companies in Asia such as Alibaba, Tencent, Baidu, JD.com and Samsung.
Technological adoption and advancement is occurring at a faster rate in Asia compared to western countries, which is why this ETF’s underlying earnings could continue to grow faster than the typical western-focused ETFs.
According to BetaShares, this ETF has a price/earnings ratio of 23, which isn’t bad, and a dividend yield of just over 1.25%.
I think both ETFs offer excellent diversification away from the ASX. At the current prices I’m more inclined to buy shares of the Asia Tech ETF due to the higher likelihood of ASX-beating growth.
Where to invest $1,000 right now
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*Returns as of February 15th 2021
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF and Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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