There are some quality exchange-traded funds (ETFs) that could be a buy. They have made strong returns over the last few years.
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There are some exchange-traded funds (ETFs) that have been generating strong returns over the last few years.
You may have heard of some of the largest ETFs like Vanguard Australian Shares Index ETF (ASX: VAS) and BetaShares Australia 200 ETF (ASX: A200). Those two just focus on the 300 and 200 largest shares on the ASX, respectively.
But there are other ETFs that give international diversification and have produced stronger returns:
VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)
This ETF is provided by VanEck, one of the biggest providers in Australia. It says that VanEck Vectors Morningstar Wide Moat ETF gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar’s equity research team.
The ETF utilises Morningstar’s research process to find businesses that possess wide economic moats and are trading at attractive prices relative to Morningstar’s estimate of fair value.
All of the businesses that it’s invested in are listed in the US, but the underlying earnings from the companies that make up the portfolio can (and many do) generate earnings from across the world.
Looking at the latest monthly portfolio disclosure, it had 50 holdings with the largest 10 positions being John Wiley & Sons, Charles Schwab, Corteva, US Bancorp, Wells Fargo, Constellation Brands, Bank of America, Boeing, Yum! Brands and Cheniere Energy.
The sector allocation of the ETF is fairly diversified, these are the biggest five weightings with the percentage allocated: healthcare (18.8%), financials (17.6%), information technology (17.5%), industrials (12.2%) and consumer staples (10.8%).
VanEck Vectors Morningstar Wide Moat ETF has annual management costs of 0.49% per annum.
Its returns over the past five years has been 16.6% per annum, which was 2% per annum better than the S&P 500.
Betashares Global Cybersecurity ETF (ASX: HACK)
This ETF is a way for investors to get exposure to the world’s leading cybersecurity companies in a single ASX trade. The portfolio includes global cybersecurity giants, as well as emerging players, from a range of global locations.
BetaShares says that with cybercrime on the rise, the demand for cybersecurity services is expected to grow strongly for the foreseeable future.
A vast majority of the portfolio is made up of businesses listed in the US, but there are representations from other countries like the UK, Israel, Japan and France.
Its biggest 10 positions on 27 January 2021 were: Crowdstrike, Zscaler, Cisco Systems, Accenture, Splunk, Fireeye, Proofpoint, Juniper Networks, F5 Networks and Fortinet.
This ETF has annual management fees of 0.67%. In terms of returns, Betashares Global Cybersecurity ETF has made net returns of 25.6% per annum over the last three years and 21.4% since inception in August 2016.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. The Motley Fool Australia has recommended VanEck Vectors Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.