Warren Buffett has long favoured businesses that can stay strong for a very long time.
One way to think about this is through the idea of a moat.
A moat is the defence around a business. It is what makes it hard for competitors to come in, steal customers, crush margins, or copy the model.
That moat can come from a powerful brand, scale, patents, network effects, customer loyalty, cost advantages, or products that are painful to replace once they are embedded.
Its value is that it can give a company more time, more pricing power, and more room to keep earning attractive returns.
Fortunately, ASX investors do not have to identify every moat stock themselves. These two ASX exchange traded funds (ETFs) are built around that idea.
Image source: Motley Fool Editorial
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
One way to put the moat idea to work is through the VanEck Morningstar Wide Moat ETF.
This fund focuses on US companies that have durable competitive strengths, while also taking valuation into account.
That second part is important. A great business can still be a poor investment if the price is too high.
The portfolio can look quite different from a standard US index fund. Holdings currently include Fortinet (NASDAQ: FTNT), NXP Semiconductors (NASDAQ: NXPI), and NVIDIA (NASDAQ: NVDA).
That mix shows the fund is not trying to follow one theme. Fortinet gives exposure to cybersecurity, NXP sits inside the semiconductor supply chain, and NVIDIA remains one of the most important companies in advanced computing and artificial intelligence.
The common thread is not the industry. It is the idea that each business has characteristics that may help it defend its economics over time.
For investors who want a more selective way to own US shares, this ETF could be a top option.
VanEck Morningstar International Wide Moat ETF (ASX: GOAT)
Another ASX ETF that uses the same philosophy is the VanEck Morningstar International Wide Moat ETF.
This fund gives investors exposure to moat-style companies outside Australia, creating a wider opportunity set than the local market can offer.
Its holdings currently include Murata Manufacturing (FRA: MUR1), Etsy Inc (NYSE: ETSY), and Novo Nordisk (NYSE: NVO).
These companies are very different from one another. Murata is tied to electronic components, Etsy operates an online marketplace, and Novo Nordisk is a global healthcare leader.
But that is part of the appeal of this type of fund. It is not trying to tell investors that one sector will dominate the next decade. It is trying to find businesses with strong positions that may be able to keep earning good returns across different industries and markets.
That can make the fund useful for investors who like the Warren Buffett idea of owning quality businesses, but want more geographic variety than a US-only approach.
