There are a few excellent ASX exchange-traded funds (ETFs) that Aussies could own which I believe have excellent potential to beat the S&P/ASX 200 Index (ASX: XJO).
I do like the ASX, there are plenty of great businesses to choose from. But, the largest ASX shares aren't faster-growing tech businesses like the largest US tech companies.
Aussies can complement and diversify their ASX share portfolios with one, or a few, ASX ETFs that can provide that exposure to international markets.
But, I wouldn't buy an ASX ETF just for the sake of some diversification, I'd want to own an investment that I believe can perform strongly. I like the below two ASX ETFs.
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
This fund is all about finding US businesses that have strong economic moats, in other words, competitive advantages, that allow them to stay ahead of competitors (such as brand power, intellectual property and so on).
There are some great examples of companies with great competitive advantages such as Walt Disney, Campbell's (soup), Alphabet (Google), Adobe, Nike, Microsoft, Salesforce and more.
Morningstar analysts expect these businesses' economic moats to endure for at least two decades.
On top of that, the target companies considered for the portfolio must trade at an attractive price relative to Morningstar's estimate of fair value. In other words, they're great businesses trading at good prices.
Impressively, the MOAT ETF has returned an average return per year of 13.1% in the five years to 30 April 2025. But, past performance is not a guarantee of future returns.
VanEck MSCI International Quality ETF (ASX: QUAL)
This ASX ETF is another excellent option, and one I've invested in recently.
The QUAL ETF is invested in a global portfolio of 300 companies across a range of geographies, sectors and economies. It has excellent diversification, in my opinion.
It only considers the highest-quality businesses, including a high return on equity (ROE), earnings stability and low financial leverage. This means the businesses make a lot of profit for how much shareholder money is retained within the business, that profit usually grows, and they also have low levels of debt.
Each of those factors separately is a positive thing, and combined, they mean that the business is probably great. Some of the businesses in the portfolio include Microsoft, Meta Platforms, Apple and Nvidia.
The QUAL ETF has performed strongly for investors, with an average return per annum of 14.6% over the five years to 30 April 2025. Again, past performance is not a guarantee of future returns for this ASX ETF.
