I love to add high-quality investments to my portfolio, including great exchange-traded funds (ETFs).
Plenty of ETFs aren’t bad options, like the Vanguard Msci Index International Shares Etf (ASX: VGS).
But there are plenty other potential opportunities that are possibilities that could produce better returns, or that could be ‘nicer’ to own.
I particularly like this one:
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
Investors are becoming more conscious about the environment and the governance of their businesses.
Not every business is doing the ‘right’ thing, but this ETF aims to give investors an investment option that aligns with their ethics/preferences.
ETHI excludes industries and activities
One of the ways it aims to do the right thing for investors is by excluding numerous areas.
For example, it doesn’t invest in fossil fuel producers. No companies significantly engaged in making weapons, gambling, junk food or alcohol.
It avoids companies that have human rights or supply chain issues.
The ETF also excludes companies that lack gender diversity on the board.
What shares does it actually own?
The ETHI ETF has a portfolio owns 200 of the largest businesses in the world that pass the various limitations mentioned above.
These holdings come from a variety of countries, though the US makes up the biggest allocation (as it usually does in global portfolios) at almost 70% of the portfolio.
Looking at the current holdings, these are the biggest 10 positions: Nvidia, Apple, Home Depot, Visa, Adobe, ASML, Mastercard, PayPal, Toyota and Cisco Systems.
Whilst it’s not intentionally set up to be high quality in financial metrics terms, the portfolio does seem to rank quite highly in ‘quality’ terms.
Returns
Past performance is certainly no guarantee of future success.
But this group of businesses, that are doing the right things, have done well.
Since inception in January 2017, it has produced an average return per year of 22.5%. That’s after the annual management fee of 0.59%.
I think it’s a quality ETF to consider.
