3 ASX ETFs I rate as 'buy and hold' for life

Passive investing is usually the simplest.

| More on:
A man with a wide, eager smile on his face holds up three fingers.

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

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.

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.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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. has positions in and has recommended Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool Australia has recommended Alphabet, Apple, Nvidia, 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 Scott Phillips.

More on ETFs

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

S&P 500 reaches another all time high! Why MOAT ETF should outperform IVV ETF from here

Are you looking to invest in US-focused ASX ETFs? Read this first.

Read more »

The letters ETF with a man pointing at it.
ETFs

Invest $5,000 into these ASX ETFs in August

Let's see why these funds could be worth a spot in your portfolio.

Read more »

A smiling woman with a satisfied look on her face lies on a rug in her home with her laptop open and a large cup on the floor nearby, gazing at the screen. researching new ETFs
ETFs

Is the Vanguard Australian Shares High Yield ETF (VHY) unit price a buy for passive income?

The VHY ETF has a reputation for big dividends. Is it a buy today?

Read more »

A man in his office leans back in his chair with his hands behind his head looking out his window at the city, sitting back and relaxed, confident in his ASX share investments for the long term.
ETFs

3 strong ASX ETFs to buy for simple investing

These funds make investing in quality stocks very easy.

Read more »

An older gentleman leans over his partner's shoulder as she looks at a tablet device while seated at a table.
ETFs

What is the Vanguard Australian Shares Index ETF (VAS) dividend yield?

This fund is known for paying sizeable income. But how big?

Read more »

Man looking at an ETF diagram.
ETFs

Why these ASX ETFs could be strong buys in August

Let's see why these funds could be worth adding to a balanced investment portfolio.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

Invested in ASX MOAT or other VanEck ETFs? It's dividend day!

Show us the money!

Read more »

female real estate agent stands proudly in front of house
ETFs

Can't break into the housing market? Here's 3 REIT ASX ETFs to consider

These three thematic funds focus on real estate 

Read more »