I think there are some high quality exchange-traded funds (ETFs) that look very interesting as long-term investments.
These two ETFs have quality holdings and look like they have plenty of growth potential in my opinion:
VanEck Vectors MSCI World ex Aust Quality ETF (ASX: QUAL)
This ETF is about giving investors exposure to a portfolio of high quality international businesses.
To make it into the portfolio, those businesses have to rank well with a high return on equity, stable year-on-year earnings growth and low financial leverage.
Quality businesses have a habit of outperforming in difficult times and performing well during normal economic periods.
The portfolio has approximately 300 companies across a range of geographies, sectors and economies.
The biggest names in the portfolio are pretty similar to most global index portfolios: Microsoft, Apple, Facebook, Johnson & Johnson, Alphabet, Visa, Nvidia, United Health and Nestlé.
It has an annual management fee of 0.4%. Past performance is no guarantee of future performance. With that in mind, the QUAL ETF has produced net returns of an average of 15.7% per annum.
Betashares Climate Change Innovation ETF (ASX: ERTH)
This ETF is about investing in businesses that are essentially in involved in making the world a better, greener, more sustainable planet. Many of them are fighting against climate change.
According to Betashares, it has a portfolio of up to 100 leading global companies that derive at least 50% of their revenues from products and services that help to address climate change and other environmental problems through the reduction or avoidance of CO2 emissions. This covers clean energy providers, along with leading companies tackling green transport, waste management, sustainable product development, and improved energy efficiency and storage.
There are plenty of predictions out there that suggest the world is going to need to spend hundreds of billions of dollars, if not trillions of dollars, to improve the climate change situation. It’s the type of businesses in this portfolio that could make all the difference over the coming years.
Some of the businesses with the biggest weightings in the portfolio includes: Docusign, Trane Technologies, Cie De Saint-Gobain, Zoom Video Communications, Infineon Technologies, Nio, Tesla, East Japan Railway, Vestas Wind Systems and Li Auto.
It has an annual management fee of 0.65%. Past performance is no indicator of future performance, but over the last three years the index it tracks has produced an average net return per annum of 34%.
