2 excellent ETFs with compelling potential

The VGS ETF could be one of the compelling options for the long-term.

| More on:
The letters ETF with a man pointing at it.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Exchange-traded funds (ETFs) could be a compelling way for investors to gain access to some great businesses but to do it in a diversified way.

Some ETFs are focused on a particular share market – like the Australian share market or European share market. But, there are other options that give the opportunity to invest in certain sectors or themes.

With that in mind, these two ETFs could be long-term options:

Vanguard MSCI Index International Shares ETF (ASX: VGS)

This is an ETF that is focused on the global share market. It has businesses from many different "major developed countries" in the portfolio. The US does represent 70% of the portfolio, though many US companies do earn international profit as well.

Readers may have heard of many of the biggest holdings in the portfolio including: Apple, Microsoft, Alphabet, Amazon.com, Tesla, Nvidia and Meta Platforms (formerly Facebook).

It's not all tech giants – other US names include JPMorgan Chase, Berkshire Hathaway, Proctor & Gamble, Home Depot, Visa and Mastercard.

However, there are lots of non-US businesses in the portfolio too such as Nestle, ASML, Roche, LVMH, Toyota, Shell, Novartis, AstraZeneca, Novo Nordisk and Royal Bank of Canada.

There is a total of around 1,500 businesses in the portfolio.

The VGS ETF offers a globally diversified portfolio for an annual management fee cost of just 0.18%.

Past performance is not a guarantee of future results, however over the past five years the Vanguard MSCI Index International Shares ETF has produced an average return per annum of 15.2%.

However, the dividend yield of the ETF is just 1.6% according to Vanguard.

VanEck Video Gaming and Esports ETF (ASX: ESPO)

This ETF is much more concentrated than the Vanguard. It has a total of 26 positions that give investors exposure to the global gaming sector.

VanEck says that this industry is a dynamic growth opportunity, which gives investors the ability to invest in the future of gaming. The companies are positioned to benefit from the increasing popularity of video games and eSports.

Each of the businesses in the portfolio generate a significant portion of their revenue from the video gaming sector.

In terms of the biggest positions in the portfolio, these are some of the names: Tencent, Activision Blizzard, Nintendo, Nvidia, Advanced Micro Devices, Netease, Electronic Arts, Take-Two Interactive, Nexon and Bandai Namco. Ubisoft and Zynga are two of the other positions.

There is a mixture between countries – this ETF is much less focused on the US than the VGS ETF. The US is 40.4% of the portfolio, Japan is a 21.4% weighting, China is 20.1%, South Korea is 4.6%, Singapore is 4.2% and so on.

Since listing in September 2020, the ESPO ETF has produced an average return per annum of 8.5%. However, the index that it tracks has produced an average return of 29% per annum over the last five years. Past performance is not a reliable indicator of future performance though.

Should you invest $1,000 in Resolute Mining Limited right now?

Before you buy Resolute Mining Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Resolute Mining Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has recommended VanEck Vectors ETF Trust - VanEck Vectors Video Gaming and eSports ETF and Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ETFs

Happy man holding Australian dollar notes, representing dividends.
ETFs

How to turn $500 a month into $250,000 with ASX ETFs

This is the easy way to build wealth. Let's see how it works.

Read more »

ETF spelt out with a rising green arrow.
ETFs

Invest $500 into these fantastic ASX ETFs

These funds could be great picks for investors with money to invest in the share market this month.

Read more »

A group of office workers pump the air to celebrate
ETFs

Why VanEck Australian Equal Weight ETF could be a top performing ASX ETF in 2025

This ETF could be primed for a particularly successful 2025.

Read more »

woman talking on the phone and giving financial advice whilst analysing the stock market on the computer with a pen
ETFs

2 under the radar ASX ETFs that are up more than 100% over 5 years

It might be worth adding these two ETFs to your radar.

Read more »

a business person checks his mobile phone outside a Wall Street office with an American flag and other business people in the background.
ETFs

The pros and cons of buying BetaShares NASDAQ 100 ETF (NDQ) units this month

Is this the right time to invest in US stocks?

Read more »

Smiling business woman calculates tax at desk in office.
ETFs

Buying the dip: $10,000 invested in VTS ETF and NDQ ETF at the recent trough is now worth?

Let's do the calculations.

Read more »

ETF spelt out
ETFs

3 compelling ASX ETFs I'd buy for diversification and income

These funds offer a number of compelling attributes.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
ETFs

3 high-conviction ASX ETFs to buy and hold forever

These funds could be quality picks for investors looking for buy and hold options.

Read more »