There are a few exchange-traded funds (ETFs) that could be worth looking at in February 2021.
An ETF allows investors to buy a large group of shares in a single trade, providing diversification.
Here are two ETFs that could be worth looking at:
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Betashares Nasdaq 100 ETF (ASX: NDQ)
This has been one of the highest-performing large ETFs over the past few years.
The idea of this is to give investors exposure to 100 of the largest businesses in the US on the NASDAQ stock exchange.
This ETF is weighted towards technology, with almost half of the portfolio invested in information technology. Another 19% of the ETF is invested in consumer discretionary businesses and 18.6% is invested in communication services. Healthcare makes up 6.5% of the portfolio and industrials is responsible for 1.9%.
Looking at the holdings in the portfolio, there is heavy exposure to many of the biggest US technology businesses: Apple is 12.1% of the portfolio, Microsoft is 9.4% of the portfolio, Amazon is 8.6% of the portfolio, Alphabet is 6.3% of the portfolio, Tesla is 5% of the portfolio and Facebook is 3.3% of the portfolio.
Betashares Nasdaq 100 ETF also has investments in other technology businesses like Nvidia, PayPal, Intel, Netflix, Adobe, Advanced Micro Devices, Intuit and Applied Materials.
The ETF isn't just about technology companies, it has many non-tech names in the portfolio like PepsiCo, Costco, Starbucks, Intuitive Surgical, Moderna and Monster Beverage.
There are also a couple of Asian giants listed on the NASDAQ, so they are within the ETF's portfolio too including Baidu and JD.com.
The annual management fee of this ETF is 0.48% per annum.
Looking at the net returns, after fees, of the ETF shows a 13.3% net return over the past six months, a 34.8% net return over the past year, a 27.4% per annum net return over the last three years and a 21.4% net return per annum since inception in May 2015.
VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)
This ETF is about giving investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages according to Morningstar's equity research team.
The 'wide moat' part of the name comes from the fact that there's a focus on quality US companies Morningstar believes possess sustainable competitive advantages, or 'wide economic moats'.
To make it into the VanEck Vectors Morningstar Wide Moat ETF portfolio, those target companies need to be trading at attractive prices relative to Morningstar's estimate of fair value, after a rigorous equity research process.
The entire portfolio is invested in businesses listed in the US, though the underlying earnings comes from multiple countries.
However, the investments are spread across a number of sectors. Those industries with a weighting of more than 5% include: health care (18.8%), financials (17.6%), information technology (17.5%), industrials (12.2%), consumer staples (10.8%), consumer discretionary (8.5%), communication services (5.5%) and materials (5.2%).
In terms of the actual holdings of VanEck Vectors Morningstar Wide Moat ETF, as of 29 January 2021 it had 49 holdings. The biggest positions were: Corteva, Dominion Energy, Emerson Electric, General Dynamics, Gilead Sciences, Alphabet, Guidewire Software, Intel and John Wiley and Sons.
After the annual management fee cost of 0.49% per annum, the net returns over the past five years have been 16.6% per annum. The index that the ETF tracks has made returns of almost 19% per annum over the last decade.
