ASX-listed exchange-traded funds (ETFs) are some of the easiest ways for investors to gain exposure to compelling businesses. They can give Aussies exposure to great international shares.
The ASX is a great place to find investments, but it only represents approximately 2% of the global share market. We should also be willing to invest in parts of the other 98% of the global economy, too.
Past performance is not a reliable indicator of future performance, but I'm optimistic the two ASX ETFs below are capable of producing good returns for the long-term.
WCM Quality Global Growth Fund (ASX: WCMQ)
This is an actively managed fund with stocks that are seen by the WCM investment team as quality, high-growth companies, sourced from developed and emerging markets. WCM only invests in businesses if the fund managers have a high conviction in the stock. The primary objective of the fund is to provide long-term capital growth.
WCM likes to look for businesses with strong and expanding economic moats, with the belief that it's the 'direction' of the economic moat/competitive advantages that could make a big difference to the long-term returns.
The fund manager also wants to see that the businesses have a corporate culture that will foster maintaining and growing the economic moat.
As state before, past performance is not a guarantee of future performance. But, over the past five years, the ASX ETF has returned an average of 15.5%. I believe the WCM investment strategy can enable ongoing outperformance.
VanEck MSCI International Quality ETF (ASX: QUAL)
The QUAL ETF is one of the biggest positions in my portfolio because I'm optimistic about what the fund can deliver in the coming years.
Being invested in the global share market is a positive thing to do, in my view, but what about only investing in the best of the best businesses?
This fund starts by analysing the global stock market and picking the 300 highest-quality businesses for the portfolio.
For a company to be considered for the portfolio, it must rank well on three important metrics.
First, it should have a high return on equity (ROE). Second, it should have earnings stability. Third, the company should have low financial leverage.
When you put those three elements together, you're talking about a high-quality business that is likely to see annual profit growth for the foreseeable future.
To me, it's not a surprise that this ASX ETF has delivered an average return per year of 14.7% per year over the last five years. But, past performance is not a guarantee of future performance, of course.
I believe these ASX ETFs can work well with a portfolio of ASX shares.
