Motley Fool Australia

2 ETFs to buy for 2020

Exchange Traded Fund (ETF)

We are almost into a new year and a new decade. Diverse exchange-traded funds (ETFs) have proven to be strong performers in 2019, so which ones will do well in 2020?

2019 has been a strong year for the ASX with Vanguard Australian Share ETF (ASX: VAS) delivering excellent results due to Australia’s interest rate sent lower by the RBA. The returns are unlikely to be repeated again, which is why I think these ETFs could be better buys for 2020:

BetaShares FTSE 100 ETF (ASX: F100) 

The UK share market could be a good place to invest now that it seems Brexit is finally going to transition to the next step.

There are plenty of attractive UK-listed shares which could be good to get exposure to like Reckitt Benckiser, Unilever, GlaxoSmithKline, Diageo and so on.

Many of the businesses within this ETF don’t just make earnings from the UK but multiple countries, perhaps globally. Brexit may not be that much of an earnings problem for many of the biggest positions. 

The ETF has annual costs to investors to 0.45%, which isn’t bad.

UK businesses are also known for paying good dividends, so the ETF could be an alternative idea for income as well.

Vanguard FTSE Asia Ex Japan Shares Index ETF (ASX: VAE) 

Asia is another great place to find alternative investment ideas. Not many Aussies are invested in Asian businesses despite the huge economies and growth being generated there.

I think this ETF is a pretty exciting one with over 22% of the ETF invested in technology businesses like Alibaba, Tencent, Baidu and so on.

The trade war looks as though it’s coming to an end, which should be a sizeable boost for the Asian share market. Despite the trade war troubles, the ETF has delivered returns of 10.6% per annum since inception in December 2015.

It has an annual management fee of 0.40% per annum, which is fairly cheap for a portfolio investing in Asian shares.

Foolish takeaway 

Both of these ETFs are diversified, have attractive underlying businesses and look cheap on a price/earnings ratio basis.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

Motley Fool contributor Tristan Harrison owns shares of VANGUARD FTSE ASIA EX JAPAN SHARES INDEX ETF. The Motley Fool Australia has no position in any of the stocks mentioned. 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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