Some of the ASX's leading exchange-traded funds (ETFs) look like buying opportunities to me. After all of the volatility, valuations have dropped and the value on offer has increased, in my opinion.
Sometimes there are problems for individual companies or a particular industry. But, when almost the whole market drops, I think it can mean the investment opportunity is more attractive.
However, while investors are trying to get to grips with what higher interest rates mean for valuations, there's also the potential impact of what may happen with the United States, Australian and global economies.
With that in mind, I think these two ASX ETFs look like good options to buy for growth, particularly amid current uncertainty.
Image source: Getty Images
VanEck MSCI International Quality ETF (ASX: QUAL)
The idea behind this investment is that it represents a portfolio of global shares that rank well on multiple quality metrics. It's invested in a portfolio of around 300 businesses across a range of geographies, sectors and economies.
To make it into the portfolio, companies have to rank highly on return on equity (ROE), earnings stability, and low financial leverage.
Its investments include recognisable names like Apple, Microsoft, Johnson & Johnson, UnitedHealth, Alphabet, Visa and Nvidia. While all of the biggest holdings may be from the US, there are other countries with sizeable weightings. Such countries include Switzerland, Japan, the United Kingdom, the Netherlands and Denmark.
Over the five years to 30 September 2022, the ETF had returned an average return per annum of 12.5%. This compares to an average return per annum of the MSCI World ex Australia Index of 9.7%. But, past performance is not a guarantee of future outperformance.
VanEck Morningstar Wide Moat ETF (ASX: MOAT)
This is another quality-based ASX ETF from VanEck.
This one is about finding companies in the US that have strong competitive advantages that it expects will endure for at least a decade and probably two decades. Advantages can come in many different forms including costs, intellectual property, brand power, and so on.
However, Morningstar analysts will only add an investment to the portfolio if the business is trading at an "attractive price" relative to Morningstar's estimate of fair value.
On 1 November it had 48 holdings. Only one position had a weighting of less than 1%, which was 0.95%, so the position sizes are reasonably similar. Nonetheless, these were the biggest weightings: Biogen, Gilead Sciences, MercadoLibre, Wells Fargo, and Emerson Electric.
In terms of performance, the VanEck Morningstar Wide Moat ETF had returned an average of 14% per annum over the five years to 30 September 2022. That compares to a 13.2% per annum return for the S&P 500 Index (SP: .INX). Again, past performance is not a guarantee of future returns.
