There are a couple of ETFs that I’ve got my eyes on for long-term investments. I’ll tell you all about them in this article.
An exchange-traded fund (ETF) basically lets you invest in a whole bunch of different businesses with a single investment.
It’s very handy if you want to get good diversification, but you don’t want to buy 50, or 100 or 1,000 businesses yourself. In fact, I’d say buying 1,000 different companies yourself would be a very poor choice for all the brokerage costs alone.
If you’re interested in learning about ETFs, check out Rask’s free beginner ETF course.
Betashares Nasdaq 100 ETF (ASX: NDQ)
I think that this ETF could be one of the best ways for Aussies to invest in shares. For me, the Australian share market is okay, but as a whole it lacks the quality and long term growth potential as many of the great businesses that happen to be listed in the US.
Many of the world’s best companies can be found on the NASDAQ in the US. It has attracted many of the brightest businesses onto the board, particularly technology businesses. Whereas the New York Stock Exchange is usually seen as a place for more traditional non-tech businesses.
When you look at the holdings of the ETF, you’ll see what I mean.
Its biggest positions include names like Apple, Microsoft, Amazon.com, Facebook, Alphabet, PayPal and Nvidia.
There are many other businesses that are world-leading in their industries including Netflix, Adobe, Qualcomm, Broadcom, Texas Instruments, Costco, Starbucks, Advanced Micro Devices, Intuitive Surgical, Zoom, Moderna and ASML.
Past performance is no guarantee of future performance. However, I think consistently strong returns shows the calibre of businesses within the portfolio. Over the past year NDQ made a net return of 25.8% and over the last five years it has made an average of 23.25% per year. That’s after the annual fee of 0.48%.
Betashares Global Quality Leaders ETF (ASX: QLTY)
One of the downsides of NDQ is that it’s mostly made up of US businesses. I like the idea of being invested in high quality businesses no matter where they come from, so QLTY could be the answer to balance that out.
It looks to invest in businesses that are high performing for shareholders, have low levels of debt and make good cashflow.
It’s not surprising that 60% of the portfolio is invested in US businesses – many of the world’s highest quality businesses are based there – but the other 40% of the portfolio comes from places like Japan, Switzerland, Hong Kong, Denmark, France, Germany and the UK.
Whilst there are names like Alphabet and Nvidia in the portfolio, it also gives exposure to companies like AIA, Keyence, Novo Nordisk, SAP, Hong Kong Exchanges & Clearing, L’Oreal and Nintendo.
The returns of QLTY haven’t been quite as strong, with a net return of 17.4% per annum since inception in November 2018 with non-tech businesses being affected more by this COVID-19 period.
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