With December now underway and the markets continuing to push higher (today's falls notwithstanding), many investors might be wondering where the best place to invest right now is. Well, it could be in ASX exchange-traded funds (ETFs)
Buying ASX shares over the past 12 months has been a very lucrative endeavour indeed, with the S&P/ASX 200 Index (ASX: XJO) now up more than 16% since this time last year.
However, this enthusiastic rise has left more than a few ASX shares looking expensive (looking at you, Commonwealth Bank of Australia (ASX: CBA)).
That's why, this December, I'm eyeing these two ASX ETFs as my next potential buy instead.
My two favourite ASX ETFs to buy in December
Vanguard MSCI Index International Shares ETF (ASX: VGS)
Normally, I'm a big advocate for America-centric ETFs like the iShares S&P 500 ETF (ASX: IVV) and the BetaShares Nasdaq 100 ETF (ASX: NDQ). However, the US markets have had an even better year than the ASX 200, with most of America's largest companies also looking quite pricey today. That includes popular stocks like Apple, Microsoft, Amazon and Tesla.
That's why the Vanguard International Shares ETF seems like a better pick, in my eyes. To be fair, this index fund still heavily invests in the American markets, with US stocks making up more than 70% of VGS's portfolio.
However, I think the allocations to other advanced economies like Japan, the United Kingdom, Canada, and France that VGS provides give this ETF some much-needed diversification.
As such, if I were looking to invest in an index fund-like investment today, this ASX Vanguard ETF would be a fine candidate.
Global X Defence Tech ETF (ASX: DTEC)
Another ASX ETF I'm eyeing this December is this offering from Global X.
While index funds are great, I also like to check out ASX ETFs that offer strategic exposures to sectors whose long-term trajectories look favourable. Perhaps unfortunately, defence is one of those sectors, in my view.
With conflicts still simmering across the Middle East and Eastern Europe and significant border tensions persisting in Asia, it's my view that government spending on defence and military assets will only increase in the coming years.
This trend, if it indeed eventuates, will benefit the companies that can be found in the Global X Defense Tech ETF. This ASX ETF holds a portfolio of global companies that are all leaders in the defence industry. These include Palantir, RTX Corp, General Dynamics and Lockheed Martin, as well as our own DroneShield Ltd (ASX: DRO).
I would love to see spending in global defence fall. However, we should invest in what we expect to happen, not what we'd like to happen in the world. As such, I view this ETF as a prudent buy this December as well.
