As an ASX investor, I've had a few wins over the years, as well as a few stocks I wish I never laid eyes on. I've discussed some of my worst investing decisions here at the Fool before. But today, I'd like to indulge by discussing what has indisputably been my best ASX investment.
This investment isn't exactly an ASX stock. Instead, it is an exchange-traded fund (ETF) – and it goes by the name of the VanEck Morningstar Wide Moat ETF (ASX: MOAT).
Most ETFs on the ASX are index funds, typically tracking market-wide indexes like the S&P/ASX 200 Index (ASX: XJO).
But the MOAT ETF is a little different. Instead of investing in 200, 300 or 500 stocks like most index funds do, it instead sticks to a more concentrated portfolio of around 50 companies.
These 50 companies aren't just any stocks though. They are carefully selected by Morningstar based on their possession of what is known as a wide economic moat.
A moat is a term originally coined by the legendary investor Warren Buffett. It refers to a company's intrinsic competitive advantage that it can use to protect itself and its profits from competitors.
There are many different types of moats. A company could offer a product that has no viable alternatives, such as one of Transurban Group's (ASX: TCL) toll roads. Or it could have a strong brand that commands loyalty from customers, as Apple does. It could also just be able to offer products at a lower price than competitors, which companies like Woolworths Group Ltd (ASX: WOW) or Amazon arguably possess.
Companies that have a moat are usually among the stock market's top performers over long periods of time for this reason.
And they exclusively occupy the MOAT ETFs portfolio at any given moment.
MOAT is my best-performing ASX stock. Here's why
Looking at some of the MOAT ETF's current holdings, we can see this in action. Right now, an investment in this ETF represents interests in names like Nike, Google-owner Alphabet, media giant Disney, cereal king Kellogg, software provider Adobe, and vaccine and medicine titan Pfizer. Not to mention Amazon itself and Warren Buffett's own Berkshire Hathaway.
I think every investor can agree that these are some of the best companies in the world.
And they can all be yours with an investment in the VanEck Wide Moat ETF.
I've owned this investment for years, and it has brought nothing but prosperity to my ASX stock portfolio. In fact, MOAT is my best-performing ASX-listed investment, and by a mile too.
Looking at its performance figures in recent years, it's not hard to see why. According to the ETF provider, MOAT units have returned an average of 18.55% per annum over the past three years (including dividend distributions), and 15.57% per annum over the past five.
Since this fund's ASX inception in 2015, investors have enjoyed an average return of 16.04% per annum.
So you won't be surprised to learn that this is one of my favourite investments and one that I will probably never sell. In fact, I can't wait to pick up some more when I can.
