2 impressive ASX ETFs I'd buy for growth

Quality ETFs could be the way to go for outperformance.

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Key points

  • In the longer-term, businesses with strong quality metrics could keep performing, in my eyes
  • Vaneck Morningstar Wide Moat ETF is invested in strong businesses which are expected to endure for at least two decades
  • VanEck MSCI International Quality ETF is invested in companies that earn strong, consistent profits for shareholders, with low debt levels

I'm a big fan of ASX exchange-traded funds (ETFs) that can provide our portfolios with different investment exposure but can still generate good returns.

I think ETFs like iShares S&P 500 ETF (ASX: IVV) and Vanguard MSCI Index International Shares ETF (ASX: VGS) are solid options, but the ones that are focused on quality metrics are at the top of my list. Let me tell you about two of them.

Vaneck Morningstar Wide Moat ETF (ASX: MOAT)

This ASX ETF is all about investing in high-quality US-listed businesses that have strong competitive advantages that Morningstar analysts believe are almost certain to endure for a decade or two.

Competitive advantages can come in a number of different forms such as intellectual property, brand power, network effects, costs and so on.

But, one of the advantages of this ASX ETF is that it only invests in these high-quality businesses when the share price is at an attractive level compared to the analysts' view of what a fair price is.

Past performance is not a guarantee of future results, but I think the process can continue to deliver good returns. Over the past five years, the MOAT ETF has delivered average returns per annum of 17%, with an annual management fee of 0.49%.

VanEck MSCI International Quality ETF (ASX: QUAL)

This ASX ETF also offers Aussies global diversification. It has a portfolio of around 300 names from around the world that rank well on three key metrics: a high return on equity (ROE), earnings stability and low financial leverage.

The combination of those elements means they make a lot of profit with retained shareholder money in the business, earnings are predictable and they have a very healthy balance sheet.

Many of the businesses in the portfolio are the biggest US players, but there is also representation from countries like Switzerland, Japan, the Netherlands, the UK and more.

Almost 40% of the portfolio is invested in the IT sector, which I think is a good growth sector.

Over the past five years, the QUAL ETF has delivered average returns per annum of 14.9%, which is after the annual management fees.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Vanguard Msci Index International Shares ETF. The Motley Fool Australia has recommended VanEck Morningstar Wide Moat ETF, Vanguard Msci Index International Shares ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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