Exchange-traded funds (ETFs) proved to be extremely popular investments in 2020. So popular in fact, that the all-time record for ETF inflows was broken twice last year. Take the month of October. It saw a record $2.3 billion flow into ASX ETFs, surpassing the $2.1 billion of the previous month.
But now that we’ve started a new year, which ETFs are primed for the challenges of 2021 and beyond? Here are 2 popular ETFs worthy of a closer look:
VanEck Vectors Wide Moat ETF (ASX: MOAT)
MOAT is a rather unique ASX ETF as it only holds a select group of US-listed shares – 49 on the latest update, to be precise. Amongst MOAT’s holdings, you will find famous names like Amazon.com Inc (NASDAQ: AMZN), Intel Corporation (NASDAQ: INTC), McDonald’s Corp (NYSE: MCD), Boeing Co (NYSE: BA) and Kellogg Company (NYSE: K).
What do MOAT’s holdings all have in common? Well, as you might guess, a moat. This ETF only holds companies that Morningstar have identified as possessing a ‘wide economic moat’, which is another way of saying ‘intrinsic, sustainable competitive advantage’. That might be a powerful brand, like with Kellogg or McDonald’s, or being able to offer lower prices than competitors, as Amazon can.
These are the kinds of businesses that Warren Buffett famously loves, and for good reason. Over the past 5 years, MOAT has averaged a return of 16.58% per annum.
BetaShares Asia Technology Tigers ETF (ASX: ASIA)
A second ETF to look at today is this fund from BetaShares. ASIA aims to hold 50 of the largest technological disrupters from Asia (excluding Japan). We’re all familiar with the big US tech companies like Amazon and the success they have shared with their investors. But, whilst these companies are dominant in many parts of the world, they are arguably not so big in Asia. China, for instance, doesn’t even allow many of these companies access to their market at all. And that’s where ASIA comes in.
Its largest holdings include giants like Tencent Holdings, Alibaba and Samsung Electronics. All of these companies are dominant in Asia, and many (like Samsung) have a global presence as well. As such, this ETF can be a way to diversify in the tech space beyond the FAANG stocks like Amazon.
ASIA has returned an average of 22.54% per annum since its inception in September 2018, including a 62.01% return for the past year alone.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Boeing, Intel, Kellogg, McDonalds, and VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Intel and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool Australia owns shares of and has recommended BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended Amazon and VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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