I believe many Aussies would benefit by increasing their exposure to international shares. ASX exchange-traded funds (ETFs) could be a smart way to gain that exposure.
The ASX only accounts for approximately 2% of the global share market, which means sticking to investing in the ASX share market could mean missing out on some of the top-performing opportunities.
We don't want to monitor every single global market, such as the United States, the United Kingdom, Japan, and so on. That's a lot of stocks!
Instead, Aussies could invest in an index fund such as the Vanguard MSCI Index International Shares ETF (ASX: VGS), which delivers international exposure in one bite. They could also go with some of the leading active fund managers who try to pick out those opportunities.
Here are two fund managers that have a strong track record.
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Munro Global Growth Fund (ASX: MAET)
This fund gives investors access to the Munro Global Growth Fund strategy, which aims to invest in a portfolio of 30 to 50 global growth shares. I believe that's enough holdings to be diversified.
This fund invests in the Munro Global Growth Fund, which has $1.6 billion of funds under management (FUM), so it's an established strategy.
Munro tries to identify themes, or 'areas of interest', where stocks can perform strongly. At the end of November 2024, 55.1% of the fund was allocated to five areas of interest: climate (15.6%), digital enterprise (13.3%), security (9%), infrastructure (9%) and high-performance computing (8.2%).
At the end of November 2024, its portfolio had five largest positions: Nvidia, Amazon, Constellation Energy, Microsoft, and CRH.
I'd expect volatility with a global growth fund, but this ASX ETF also aims to preserve investors' capital by utilising various tools and tactics, such as increased cash levels, shorts, put options, currency hedging, and managing the amount of exposure it provides to each investment.
The Munro Global Growth Fund strategy started on 1 August 2016. Since then, it has delivered an average annual return of 13.8%, which I think is a very commendable performance. By focusing on great businesses in compelling growth areas, I think this ASX ETF can continue to outperform in the long term.
WCM Quality Global Growth Fund (ASX: WCMQ)
This ASX ETF gives investors exposure to the WCM quality global growth strategy. It invests in a portfolio of between 20 to 40 stocks which are seen as quality global companies, primarily from the consumer, technology and healthcare sectors.
WCM believes corporate culture is the biggest influence on a company's ability to grow its competitive advantages, also called its economic moat. The fund manager thinks the 'direction' of a company's moat is more important than its size. It wants to see a corporate culture that supports the expansion of the moat.
It aims to provide an all-weather ASX ETF portfolio that can outperform in both up and down markets.
The biggest position in the portfolio, with a weighting of 10.76% at 30 November 2024, is AppLovin. Amazon was the second biggest holding with a weighting of 4.64%. WCM recently explained why it liked AppLovin:
One of the strategy's less well-known technology sector holdings — which contributed most to [December's] positive stock selection performance — is AppLovin, a Silicon Valley based advertising network and mediation platform firm.
AppLovin's software is designed to help game developers monetise players' experience through in-app purchases (i.e. mediation) and collect and use data analytics to improve content.
By operating both the advertising network and mediation platform, AppLovin enjoys unparalleled data-powered synergies, leading to superior economics and an expanding moat. Underpinning this moat growth is a strong, agile and adaptable culture led by co-founder and CEO Adam Foroughi.
Between its inception on 31 August 2018 to November 2024, the WCM Quality Global Growth Fund returned an average of 16.05% per year, beating the global share market by an average of 3.5% per year.
While the performances of both funds aren't reliable indicators of future returns, they do show how well they can do.
