I think there are plenty of good exchange-traded fund (ETF) opportunities to find on the ASX share market for June 2022.
At times like this, I think it’s worth remembering one of the cliché phrases of investing: ‘Buy low, sell high’. Investors don’t necessarily need to sell when prices go higher. But I do think that when prices are lower, it’s good to have a look for potential investments.
Sometimes it can be tricky to know which investment to go for. So, why not pick an ETF?
ETFs allow investors to buy a whole group of shares at once, which is pretty handy for diversification.
With that in mind, I like the look of these two ETFs.
VanEck MSCI International Quality ETF (ASX: QUAL)
This ETF is a portfolio of around 300 international businesses which are rated as quality businesses.
What counts as quality? These businesses should rank well on three factors: return on equity (ROE), stable year-on-year earnings growth, and low financial leverage.
In other words, it’s a portfolio of businesses that are consistently growing profit, have low levels of debt, and require a lot of shareholder funds to make a profit.
At the end of April 2022, the biggest positions in the portfolio were familiar names: Apple, Microsoft Corporation, Meta Platforms, Nvidia, Johnson & Johnson, UnitedHealth Group, Alphabet, Visa and Mastercard.
I think that the QUAL ETF is looking much better value after its almost 20% decline in 2022. The 0.4% annual management fee also seems very reasonable to me.
With this portfolio focused on quality, I think it will do well over the longer term, starting from this lower price.
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
This ETF is another one that gives exposure to a portfolio of global names. However, it is different compared to most other options.
BetaShares Global Sustainability Leaders ETF is about investing in a portfolio of “large global companies that meet strict sustainability and ethical standards”.
This portfolio excludes a number of industries including fossil fuel producers, armaments, gambling, alcohol and junk foods. Companies also have to be in the top third of performers in terms of ‘carbon efficiency’ for their industry. Or they must engage in activities that can help reduce carbon use by other industries.
Interestingly, the returns of the ETHI ETF have been solid, in my opinion. However, it’s important to note that past performance is not a reliable indicator of future performance. At end of April 2022, the ETHI ETF has returned an average of 17.3% per annum over the last five years. That return compares to an 11.4% return per annum for the widely-used global shares benchmark, the MSCI World ex-Australia Index, over the last five years.
At the latest disclosure, these are some of the biggest holdings: Visa, Home Depot, Apple, Mastercard, Toyota Motor Corp, Nvidia, UnitedHealth Group, Cisco Systems, Adobe and ASML Holding. I think these holdings tick the ‘quality’ box as well.