Aside from market-tracking exchange traded funds (ETFs), I think ETFs are an under-appreciated way of investing in shares from both Australia and around the world.
Sure, you can invest in something like the iShares Core S&P/ASX 200 ETF (ASX: IOZ) if you just want to follow the S&P/ASX 200 (ASX: XJO) index, but to misquote a popular Disney film, there’s also a whole new world of ETF investments out there for you to peruse.
So here are 3 top ASX ETFs that I think are amongst the best available on the ASX.
SPDR MSCI Australia Select High Dividend Yield Fund (ASX: SYI)
Rather than tracking the whole ASX 200 index, SYI chooses 40–45 of the highest-yielding ASX stocks on the market, which the fund believes will continue to pay an above-average dividend yield, complete with franking credits. This enables SYI to offer a current dividend yield of 6.04%.
I think SYI is a great choice if you’re after strong investing cash flow or if you’re reliant on dividend income to live.
VanEck Vectors Wide Moat ETF (ASX: MOAT)
MOAT is an ASX ETF that invests in high-quality US companies, based on the durability of each holdings’ competitive advantage, or ‘moat’. I think this ETF would be a great choice for investors looking for exposure to the US markets, evidenced by MOAT’s return of 17.5% per annum over the past five years.
Some of this ETF’s top holdings include shoe-king Nike, cereal giant Kellogg Co and one of Warren Buffett’s favourite US banks, Wells Fargo.
Vanguard Australian Shares Index ETF (ASX: VAS)
If you’d rather a more vanilla market-tracking ETF, I think Vanguard’s flagship VAS fund is your best choice. Rather than your standard ASX 200 index fund, VAS instead follows the ASX 300, meaning you get some smaller cap stocks thrown into the mix, which is great for diversification.
VAS has a tiny management fee of 0.1% and offers a respectable dividend yield of 4.03% at the present time.
I think these 3 ASX ETFs are amongst the best available on the ASX. Each (or even a combination) would suit most investors, in my opinion, and provide good income and returns for many years to come.
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Motley Fool contributor Sebastian Bowen owns shares of VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited and Wesfarmers Limited. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat 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.