There a number of wonderful ASX-listed exchange-traded funds (ETFs) that we can buy and hold for life.
I wouldn't say that about every ASX share or ASX ETF. There are some great businesses to choose from, but we can't say many of those will do well over the long-term.
I'm also hesitant to say that a particular country's share market will produce decent returns for decades, whether that's the US, Australia or anywhere else. I think the best approach is to go for diversified ASX ETFs which are invested in the global share market.
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Vanguard MSCI Index International Shares ETF (ASX: VGS)
This is one of my favourite passive investing investment options on the ASX.
It's invested in a global portfolio of shares that are listed in 'developed' countries, such as the US, Japan, the UK, France, Canada, Switzerland, Germany, the Netherlands, Denmark, Sweden, Italy, Spain and so on.
The VGS ETF has over 1,460 holdings, so it's extremely diversified. It has the largest allocation to some of the strongest businesses in the world such as Apple, Microsoft and Alphabet.
The portfolio position sizing is always changing, with new names regularly coming in.
It has a very affordable management fee of 0.18% per annum, meaning most of the return is left in the hands of investors.
Keeping in mind past performance is not a reliable indicator of future returns, the average return per annum in the last five years was 10.9% to October 2023.
BetaShares Global Sustainability Leaders ETF (ASX: ETHI)
This ASX ETF is also invested in a global portfolio of around 200 shares. The following countries had a weighting of at least 1.9%: the US, Japan, Germany, the Netherlands, Denmark, Canada and the UK.
But it doesn't just invest in the biggest businesses, there is a significant ethical screening process. We can feel good about the businesses owned within this buy-and-hold investment.
The companies have to be in the top one-third in carbon efficiency in their industry, or be engaged in activities that can help reduce carbon emissions by other industries.
The ETHI ETF doesn't invest in fossil fuels, gambling, tobacco, junk foods and so on.
Considering the work done to create the portfolio, I think the annual management fee of 0.59% is reasonable.
Again, past performance is not a guarantee of future performance – in the past five years, the ETHI ETF has delivered an average return per annum of 17%.
VanEck MSCI International Quality ETF (ASX: QUAL)
There are roughly 300 companies in this ASX ETF from a range of different countries and sectors.
The idea for this ASX ETF is it's invested in the world's "highest quality companies based on key fundamentals" according to VanEck. Those fundamentals are: high return on equity (ROE), earnings stability and low financial leverage.
The biggest positions in the portfolio are Apple, Microsoft and Nvidia, as examples that rate highly which are currently in this buy and hold investment.
Over the past five years, the QUAL ETF has delivered an average return per annum of 15.7%, which is after the annual management fee of 0.4%.
I think it makes sense to own a portfolio of high-quality performers via this ASX ETF.
