Quality exchange-traded funds (ETFs) could be good considerations to think about for the long-term.
ETFs allow investors to get exposure to a number of investments in a single trade. Some are focused on a particular industry, such as Betashares Global Cybersecurity ETF (ASX: HACK) whereas others give exposure to a wider array of businesses such as an index of shares like iShares S&P 500 ETF (ASX: IVV).
These two ETFs could be ones to think about:
Vanguard Msci Index International Shares ETF (ASX: VGS)
This is a broad ETF which has over 1,500 holdings spread across the world. That represents a lot of diversification. It's a globally-focused ETF that looks to track the MSCI World ex-Australia Index. In other words, it's giving investors exposure to many of the world's largest companies listed in major developed countries.
Whilst the US gets almost 70% of the portfolio's allocation, there are a number of places that get an allocation of at least 1%: Japan, the UK, Canada, France, Switzerland, Germany, the Netherlands, Germany, Sweden and Hong Kong.
The top holdings represent around 18% of the portfolio, so it's not quite as concentrated as some other ETF portfolios that give exposure to the growth-focused FAANG names (Facebook, Apple, Amazon and so on).
Vanguard Msci Index International Shares ETF's biggest 10 holdings are: Apple, Microsoft, Alphabet, Amazon.com, Facebook, Tesla, Nvidia, JPMorgan Chase, Johnson & Johnson and Visa.
It has a pretty low annual management fee of just 0.18%, which is a lot cheaper than most active fund managers.
The long-term returns of this ETF have been in the double digits, though past performance is not an indicator of future performance. Over the last five years it has produced an average return per annum of 14.7%.
VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)
This ETF operates fairly differently to the Vanguard one.
VanEck says the 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 are only sourced from US stock exchanges, but the underlying businesses can (and do) generate earnings from overseas.
Companies only make it into the portfolio if they are trading at good value prices compared to the estimate of fair value by Morningstar.
As of 10 August 2021, the biggest 10 weightings in the portfolio (with each allocation between 2.5% and 3% of the portfolio) were: Pfizer, Alphabet, Servicenow, Microsoft, Facebook, Wells Fargo, Tyler Technologies, Cheniere Energy, Salesforce.com and General Dynamics.
At the end of July 2021, just over 20% of the portfolio was invested in healthcare, with 16.6% invested in IT and 15.4% invested in industrials. Financials (13.3%) and consumer staples (11.1%) were the other two sectors with double digit weightings.
VanEck Vectors Morningstar Wide Moat ETF comes with an annual cost of 0.49%.
Past performance is not a reliable indictor of future performance. Over the last five years, the ETF has produced an average return per annum of 19.4%.
