The good thing about buying a quality ETF is that it provides you good diversification through a single investment because of the ability to buy a whole group of different shares.
Two quality ETFs I’d buy today for my portfolio:
iShares S&P Global 100 (ASX: IOO)
This ETF is provided by Blackrock, which is one of the best ETF providers in the world due to the low fees. It’s invested in 100 of the biggest businesses in the world.
It’s hard to say which region or industry will perform the best. But if you’re just always invested in the biggest 100 shares then power and earnings will likely keep accruing to that group, whichever businesses are in the ETF. This group makes it a quality ETF in my mind.
Some of the current top holdings include Microsoft, Apple, Amazon, Alphabet, Nestle, Roche, Novartis, Samsung, Walmart, Toyota, Astrazeneca and Sanofi.
It comes with an annual management fee of 0.40%. That’s more expensive than other ETFs available on the ASX, but it’s cheaper than many active Australian fund managers.
Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE)
Asian shares offer something very different to most other regions. The economies behave somewhat differently and those governments behave differently.
I believe this ETF’s largest holdings are among some of the best in Asia or perhaps the entire world at what they do. I think that makes it a quality ETF for its market leading businesses. Among the top 10 holdings are Alibaba, Tencent, Taiwan Semiconductor Manufacturing, Samsung, AIA and Ping An Insurance.
You can get this exposure for an annual management fee of 0.40% per annum. I think that’s great for getting Asia exposure.
It’s invested in over 1,200 holdings, it has a price/earnings ratio of just over 12x and return on equity (ROE) ratio of almost 15%. There’s a lot to like about the quantitative factors of this ETF. On the numbers side of things, I think it looks like a real quality ETF.
The risks and rewards are higher with the Asian ETF. I don’t think you can go too wrong with the S&P Global 100 ETF over the long-term, it’s a quality group of shares. But the best returns will probably be made by the best individual shares if that’s what you’re aiming for.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.