Some ASX exchange-traded funds (ETFs) have recently hit all-time highs, which may lead investors to wonder if now is the right time to take some profits off the table.
The ASX share market and global share market have both performed strongly in the last couple of years.
Some of the most compelling ASX ETFs have delivered pleasing returns for investors. Based on their latest monthly statistic updates, these ASX ETFs have delivered a return over the past year:
The Vanguard MSCI Index International Shares ETF (ASX: VGS) has delivered a total return of 18.9%.
The VanEck MSCI International Quality ETF (ASX: QUAL) has delivered a total return of 27.75%.
The VanEck Morningstar Wide Moat ETF (ASX: MOAT) has delivered a total return of 19.7%.
The Vanguard Australian Shares Index ETF (ASX: VAS) has delivered a total return of 14.6%.
It's not every year that these ASX ETFs deliver these sorts of returns. As we can see on the charts above, some of them have recently hit all-time highs.
Is it time to sell ASX ETFs?
If investors want to take some profits off the table, then that's not necessarily a bad thing to do. It's entirely possible that a bear market could happen in the next few months or next year.
But, over the long term, we've seen share markets continue to reach new all-time highs.
Yes, volatility is common, and the market experiences a major sell-off every so often. But, historically, share markets have recovered and reached new highs.
Companies aim to make a profit, and there are several tailwinds for most businesses to generate more profit. The Australian and global populations keep growing, which increases the number of potential shoppers, subscribers, borrowers, passengers, and so on for companies to reach.
We've also seen in the last couple of years how inflation has boosted revenue for many businesses while the items or services delivered remain the same. Assuming profit margins stay the same (or improve), then inflation over time can boost the bottom line as well.
Businesses also regularly release new or updated products or services to try to win new customers and retain existing customers. This can typically lead to growing revenue.
When you put all of those factors together, it's no wonder individual companies like Microsoft, Alphabet, Apple, Wesfarmers Ltd (ASX: WES), Pro Medicus Ltd (ASX: PME) and WiseTech Global Ltd (ASX: WTC) keep growing profit over the long-term.
So, I wouldn't sell good ASX ETFs just because they have reached a 52-week high or an all-time high. The underlying business holdings within these ASX ETFs are doing their best to grow their profit. I believe this will help increase their underlying value over the long term.
