There are some exchange-traded funds (ETFs) available to ASX investors which can provide access to global returns.
What’s an exchange-traded fund?
ETFs allow investors to buy a large group of businesses in a single investment, rather needing to go out and buy every single one yourself.
Some ETFs are focused on ASX shares like Vanguard Australian Shares Index ETF (ASX: VAS) and BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC). However, the ASX only makes up 2% of the global share market.
Here are two that have been rated as buys by a Motley Fool service:
VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)
According to VanEck, this ETF gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.
The businesses in this ETF are rated as having “wide economic moats” and are priced at attractive value compared to Morningstar’s estimate of fair value.
This ETF is invested in a variety of sectors, though the biggest two make up a substantial portion of it. Information technology businesses have a 21.3% weighting in the ETF’s holdings, health care has a 19.6% weighting, financials have a 16.5% position, consumer staples have a 10.5% weighting and consumer discretionary has an 8.2% portfolio weighting.
I’m sure you want to know what some of its holdings are. It has a total of 48 positions. These are the positions that have a weighting of more than 2.5% of the portfolio: Applied Materials Inc, Corteva Inc, Biogen Idec Inc, Salesforce.com Inc, Microchip Technology Inc, Schwab (Charles) Corp, Yum! Brands Inc, Bristol Myers Squibb Co, Compass Minerals Internation, US Bancorp, Aspen Technology Inc, Berkshire Hathaway Inc, Pfizer Inc and Zimmer Biomet Holdings Inc.
Over 90% of its holdings are worth more than $5 billion and none are worth under $1 billion.
ETF investors like to know the annual management fee cost of an ETF as the higher the fee, the more it hurts the net returns. VanEck charges an annual management fee 0.49% per annum.
In terms of performance, this investment has generated net returns of 18.6% per annum since inception, slightly outperforming the S&P 500.
VanEck Vectors Morningstar Wide Moat ETF is still rated as a buy by Motley Fool’s Share Advisor service which liked the exposure to quality businesses, the growth potential and the diversification on offer.
Betashares Global Cybersecurity ETF (ASX: HACK)
BetaShares operates this ETF as a way for investors to get exposure to the leading companies in the global cybersecurity sector. It has an annual management fee of 0.67%.
Some of the biggest holdings in this ETF include Crowdstrike, Okta, Zscaler, Accenture, Cisco Systems, Cloudflare, F5 Networks, Fireeye, Leidos and Booz Allen Hamilton.
Overall, it has around 40 positions which largely come from the US, though there are also holdings in the UK, Israel, Japan and so on.
Since inception in August 2016, the ETF has generated net returns of 16.8% per annum.
Betashares Global Cybersecurity ETF is still rated as a buy by the Pro Motley Fool service.
Pro was attracted to the this investment because larger amounts of important information is being stored online and hackers are becoming more sophisticated, so cyber defence is becoming more critical than ever, which should help the earnings of businesses in the ETF. The team at Pro expects this to be a long-term secular trend. Pro thought it was helpful that the ETF gives diversification away from Australian-based companies and the fact that it’s hard to find access to the cybersecurity growth theme on the ASX. Pro said that of those businesses listed on the ASX, most are small, highly illiquid and burning through cash (and often all three).