I’ve got my eyes on two exchange-traded funds (ETFs) that I’d like to buy for the long-term.
I think ETFs are a great way to get a good amount of diversification. Some ETFs also have quite good growth potential because of the underlying performance and/or valuations of the businesses in those portfolios.
Here are two I like the look of:
VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)
This ETF is one of my favourites available on the ASX. For me, it offers the combination of a high-quality investment portfolio combined with very reasonable management fees that investors might expect from ‘good’ ETFs.
The annual management is 0.49%. That’s less than half of what many Aussie-based global fund managers charge.
MOAT ETF’s shares in the portfolio are chosen by analysts at Morningstar. They look for businesses with strong economic moats. Essentially, that means they want to find businesses with long-term competitive positions which are also trading at a good price.
As share prices change, the portfolio shifts as well to the next opportunities. Past performance is no guarantee of future performance, but since the ETF’s inception it has produced net returns of 20.4% per annum.
At the end of May 2021, its biggest positions were: Wells Fargo, Cheniere Energy, Alphabet, Northrop Grumman, Raytheon Technologies, Philip Morris International, General Dynamics, Berkshire Hathaway, Yum! Brands and Altria Group. There is a total of 51 positions.
VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)
This ETF is pretty different to many others on the ASX. It’s focused on a particular sector – the video gaming and e-sports sector.
There’s a long-term growth trend of video gaming. It has being accelerated by the internet, with both the ability to play with others and watch professional e-sports events.
These events can see audience sizes similar to that of World Cup soccer games or the Olympics.
At the moment, some of the 25 positions in the portfolio are: Nvidia, Tencent, Nintendo, Activision Blizzard, Electronic Arts, Take Two Interactive, Bandai Namco and Ubisoft.
It’s a pretty new ETF, but the index it tracks has been around a while – over the last five years it has returned an average of 33.6% per annum. I wouldn’t expect the returns to be that strong going forward, but it shows how much these businesses have been growing.