If you're keen to invest but don't relish the idea of buying individual ASX shares, exchange-traded funds (ETFs) could be a great option for you.
Even if you already own shares, ETFs can be a simple and cost-effective way of helping to diversify your portfolio across different companies, sectors, and geographic locations.
Due to their surging popularity among Aussie investors, the number of ETFs on the local exchange has skyrocketed in recent years. So even choosing which ETF to buy can be a challenge.
We asked our Foolish writers which ASX ETFs they believe are worth buying this month. Here is what the team came up with:
6 best ASX ETFs for March 2023 (smallest to largest)
VanEck Morningstar International Wide Moat ETF (ASX: GOAT), $25.09 million
BetaShares Australian Dividend Harvester (ASX: HVST), $178.96 million
Vanguard MSCI International Small Companies Index ETF (ASX: VISM), $251.86 million
VanEck Morningstar Wide Moat ETF (ASX: MOAT), $509.56 million
Betashares Nasdaq 100 ETF (ASX: NDQ), $2.60 billion
Vanguard Australian Shares Index ETF (ASX: VAS), $12.24 billion
(Market capitalisations as at market close on 6 March 2023)
Why our Foolish writers love these ASX exchange-traded funds
VanEck Morningstar International Wide Moat ETF
What it does: This ETF provides investors with exposure to a portfolio of global companies that have attractive valuations and sustainable competitive advantages.
By James Mickleboro: Unlike the MOAT ETF, which focuses on US companies, this fund gives investors access to wide-moat companies from all over the world.
To be assigned a wide-moat rating, there must be very high confidence that a company's competitive advantage will remain for at least 20 years. It is for this reason, I believe the VanEck Morningstar International Wide Moat ETF could prove to be a great long-term option for ASX investors.
Among its 68 holdings are companies including Airbus, ASML, Mercadolibre, and Microsoft.
Over the last decade, the index the fund tracks has generated an average return of 16% per annum.
Motley Fool contributor James Mickleboro does not own units in the VanEck Morningstar International Wide Moat ETF.
BetaShares Australian Dividend Harvester
What it does: The BetaShares Australian Dividend Harvester intends to offer investors franked passive income above the net income yield of the broader ASX. It provides exposure to a diversified portfolio of ASX shares. The ETF's top holdings are in the financials sector (30%) and the materials sector (25%).
By Bernd Struben: With interest rates likely to remain elevated for some time, making share price gains harder to come by, this high-yielding ETF could offer some welcome passive income for ASX investors.
Based on the past 12 months, the fund's yield is 7.2%, with a grossed-up yield of 10.1%. The franking level was 93%, as at 31 January.
Naturally, movements in the ETF's share price could see investors pocket more or less than this when they sell the stock.
Over the past six months, the BetaShares Australian Dividend Harvester share price is up 3.8%. During that time, it delivered a net return (after fees) of 5.9% and a grossed-up yield (also post fees) of 7.1%.
The dividends are paid out monthly.
Motley Fool contributor Bernd Struben does not own units in the BetaShares Australian Dividend Harvester.
Vanguard MSCI International Small Companies Index ETF
What it does: This Vanguard ETF seeks to track the performance of the MSCI World ex-Australia Small Cap Index, providing investors with an easy way to gain diversified exposure to some of the most promising small companies abroad.
By Mitchell Lawler: Studies into the characteristics of global outperformers over the last decade have suggested that small-cap shares are far more likely to produce 10X returns than large-caps.
I believe this ETF provides an ideal way of gaining exposure to companies with, arguably, the greatest chance of achieving market-beating returns over time. Additionally, the fund excludes Australian small-caps, which helps with greater geographic portfolio diversification.
For reference, around 62% of the ETF is weighted toward companies located in the United States. This includes US-listed names such as Axon Enterprises Inc, Crocs Inc, and Macy's Inc.
The management fee is currently 0.32% per annum.
Motley Fool contributor Mitchell Lawler does not own units in the Vanguard MSCI International Small Companies ETF.
VanEck Morningstar Wide Moat ETF
What it does: This ETF invests in companies with competitive advantages that are predicted by analysts to almost certainly endure for the next decade, and probably for two decades.
By Tristan Harrison: Competitive advantages, or economic moats, can come in a number of different forms, including cost advantages, patents, brands, regulatory licenses, switching costs, network effects, and efficient scale.
By only focusing on companies with strong competitive advantages, this ETF's portfolio only owns quality businesses. On top of that, the ETF only invests if the target business is trading at a good price relative to its 'fair value', as judged by Morningstar analysts.
Past performance is not a guarantee of future results, but this ETF has returned an average of 14.5% per annum over the past five years.
Motley Fool contributor Tristan Harrison does not own units in the VanEck Morningstar Wide Moat ETF.
Betashares Nasdaq 100 ETF
What it does: This ASX ETF from BetaShares is an index fund. Not just any index fund, though; this ETF covers the American NASDAQ 100 (NASDAQ: NDX). The NASDAQ is the exchange where most of the US's tech shares are listed. As such, this is well-known as a very tech-heavy ETF.
By Sebastian Bowen: I consider this NASDAQ 100 fund a bet on American tech going forward. You'll get exposure to the giants like Apple and Amazon, as well as smaller tech names like Texas Instruments, Adobe, Intuit and MercadoLibre.
The BetaShares Nasdaq ETF has given investors some stunning returns in recent years. As of 31 January, this fund has averaged a return of 15.24% per annum over the past five years, and 15.65% per annum since its inception in 2015.
Past performance is never a guarantee of future returns, but I still think investors have a great way to add exposure to some of the best companies in the world with this ETF.
Motley Fool contributor Sebastian Bowen owns shares in Amazon, Apple and Adobe.
Vanguard Australian Shares Index ETF
What it does: The Vanguard Australian Shares Index ETF aims to track the S&P/ASX 300 Index (ASX: XKO) which, in turn, seeks to provide exposure to the broader Australian stock market.
By Brooke Cooper: It's far from a ground-breaking recommendation, and that's one of the reasons I like the Vanguard Australian Shares Index ETF.
Perhaps the best and most simple way to help protect a portfolio is to diversify, and one of the simplest ways to diversify is to invest in an index-tracking ASX ETF.
The Vanguard Australian Shares Index ETF is the only fund tracking the ASX 300 – arguably Australia's true benchmark index.
And while its management fees aren't the lowest out there, at 0.1% per annum, they're far from outrageous. Not to mention, this ETF pays out dividends each quarter.
Motley Fool contributor Brooke Cooper does not own units in the Vanguard Australian Shares Index ETF.
