If you have a spare $1,000 to invest, buying ASX shares today would be a great place to put it to use. Investing in shares has consistently been one of the best ways to build wealth, as we discussed earlier this month.
But which ASX shares to choose? That's the difficult question investors have to grapple with. After all, there are hundreds of individual companies listed on the ASX. Finding the best ones is a hard ask.
Thus, for a $1,000 investment today, I would recommend a single ASX exchange-traded fund (ETF). ETFs can be great investments. They give us the opportunity to invest in dozens (sometimes hundreds) of different shares, all under one ticker symbol. As such, ETFs are a highly effective way to boost a portfolio's diversification.
My pick for an ASX share to buy today
So I'd go with the VanEck Morningstar Wide Moat ETF (ASX: MOAT). This ETF tracks a basket of US shares that are selected on their possession of a wide economic moat. A moat is a Waren Buffett term that refers to a company's intrinsic competitive advantage.
It can be a powerful brand (think of the loyalty that Apple products inspire), or else a cost advantage (it's hard to find groceries at a cheaper price than at Coles Group Ltd (ASX: COL) or Woolworths Group Ltd (ASX: WOW)).
Buffett himself typically only invests in companies that have some kind of moat. It's one of the decisive factors that can make a company into a lucrative long-term investment.
Some of Buffett's favourite holdings that he has held for decades have obvious moats. For example, Coca-Cola Co and American Express have world-famous brands, while BNSF Railway owns assets (rail lines) that can't be duplicated by a competitor.
These are the companies that the Wide Moat ETF is designed to hold.
Some of this ETF's current top holdings include Domino's Pizza, Alphabet, Kellogg and Nike. Not to mention Buffett's Berkshire Hathaway itself.
So right from the get-go, I like how this ETF goes about investing in some of the world's best companies.
But this fund's performance is where the rubber hits the road. This ETF has delivered some stunning returns to investors over the past few years. As of 31 July, MOAT investors have enjoyed an average return of 19.55% per annum over the past three years. Over the past five, its 16.59% per annum.
As such, I can think of no better investment for an ASX share to buy with $1,000 on the ASX today. You get a diversity-enhancing portfolio of quality US shares, within a fund that has consistently delivered strong returns in recent years. While past performance is never a guarantee of future success, I still have confidence that this winner will keep on winning.
