- ETFs can give investors useful ways of investing in strong portfolios
- VanEck Morningstar Wide Moat ETF looks for high-quality, attractively priced businesses
- Betashares Global Cybersecurity ETF is invested in the world’s leading cybersecurity companies
Exchange-traded funds (ETFs) can offer investors the ability to buy into a whole group of top quality investments at the same time.
There are some ETFs that give exposure to sectors with growth tailwinds. Other ETFs may be able to provide access to leading investment strategies.
With that in mind, the below two options are possibilities for long-term growth:
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
This ETF is provided by VanEck, but it is based on the investment choices of the analysts at Morningstar.
The investment strategy is to find businesses with good economic moats, or competitive advantages. But the most important thing is that the economic moat can endure for a long time and keep allowing the business to earn outsized profits for at least a decade and probably many more years after that.
Once these high-quality businesses have been identified, the analysts only add the business to the portfolio if the stock is priced attractively compared to the Morningstar estimate of fair value.
So, it ends up being a portfolio of long-term, quality businesses that are seemingly priced attractively. Past performance is not a guarantee of future results, however the last five years of performance by the VanEck Morningstar Wide Moat ETF has been a net return per annum of 18.3%.
On 21 January 2022, these are the positions with a weighting of at least 2.7%: Wells Fargo, Cheniere Energy, Merck & Co, Berkshire Hathaway, Lockheed Martin, Altria, Philip Morris, Constellation Brands, Kellogg, Bristol-Myers Squibb, Dominion Energy and Campbell Soup.
Betashares Global Cybersecurity ETF (ASX: HACK)
This ETF is about providing investors with exposure to one of the most unfortunate growth trends – the necessary increase in cybersecurity protection due to the growing threat of cybercrime.
There have been many high profile cyber attacks in this century. There are plenty of businesses involved in protecting individuals and organisations against cybercrime. Some of the businesses in the portfolio looking to help the world includes: Cisco Systems, Accenture, Palo Alto Networks, Crowdstrike, Checkpoint Software, VMware, Juniper Networks, Leidos, Booz Allen Hamilton and Akamai Technologies.
Between 2019 and 2023 the global cybersecurity market is expected to grow from US$167.1 billion to US$248.26 billion, suggesting attractive tailwinds for the businesses involved.
BetaShares notes that Australian investors currently have few local options for gaining exposure to the fast-growing sector and that there are very few pure-play cybersecurity businesses listed on the ASX.
It is worth noting again that past performance is not a reliable indicator of future performance. However, over the past five years the Betashares Global Cybersecurity ETF had produced an average return per annum of 22.40% to 31 December 2021, after the annual fee of 0.67%.