The two exchange-traded funds (ETFs) I’m going to mention in this article could deliver exciting long-term returns.
I think ETFs are a great way to invest in a large number of shares at once. Index funds have proven to be a great way to invest in the entire market for a low-cost and generally outperform most other people that invest poorly or pay high fees.
Some of the best ETFs are the simplest with the lowest fees like iShares S&P 500 ETF (ASX: IVV) and Vanguard Australian Share ETF (ASX: VAS). They could be the perfect choices for most people.
However, it might be possible to outperform these ETFs by holding other ETFs with a more specific slant, but they come with higher risks than normal:
Vanguard FTSE Asia Ex Japan Shares Index ETF (ASX: VAE)
This might be my own favourite ETF because it gives us exposure to the Asian share market.
Asia is the region that is going through the most change and increasing the wealth of its citizens the most in percentage terms. A growing middle class and continued construction of growing cities makes China, India, Taiwan etc a very interesting place to think about.
It’s probably harder and riskier to pick an individual Asian share to invest in, which is why I like the idea of this ETF because it invests in almost 900 Asian businesses. Some of its biggest holdings include Samsung, Alibaba and Tencent.
With a PEG ratio of almost 1 and a decent dividend yield, I think there are plenty of reasons to consider this ETF for a small part of your portfolio.
BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ)
Asia may be growing fast, but the field of global robotics and AI is another area to consider.
Quoting BetaShares, the two areas of robotics and AI are “transformational technological megatrends, with the ability to disrupt multiple industries due to significant economic incentives related to ageing populations, rising labour costs, and opportunity for performance improvements.”
Some of its top holdings include Nvidia, Mitsubishi Electric, Keyence, Intuitive Surgical, Abb, Fanuc, John Bean Technologies, Yaskawa Electric, Daifuku and SMC.
Returns have been almost flat since inception over the past year, but in the past six months the return has been around 23.75% after fees after recovering from the slump in the global share market at the end of last year. Its fees are 0.57% per annum.
Again, I wouldn’t want to put a large part of my portfolio into this ETF, but if you felt like you specifically wanted more exposure to robotics and AI, this could be an idea to think about.
Both of these ETFs could materially outperform the ASX index over the next decade, but I prefer the idea of the Vanguard Asia ETF because of its diversification across many industries.
If you like the idea of investment growth but don’t like the two ETFs I mentioned then these great ASX shares could be a good alternative.
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Motley Fool contributor Tristan Harrison owns shares of VANGUARD FTSE ASIA EX JAPAN SHARES INDEX ETF. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019