Vanguard offers a wide range of exchange-traded funds (ETFs), but two stand out to me for their long-term growth potential.
Each fund below has its own investment case and can be assessed independently. Here is why I think they could be strong buys now.
Vanguard MSCI Index International Shares ETF (ASX: VGS)
The VGS ETF offers a straightforward way to invest in many of the world's largest listed businesses.
It held over 1,200 companies at the end of June across major developed markets outside Australia. Its largest positions included NVIDIA, Apple, Alphabet, Microsoft, and Amazon.
These businesses are exposed to long-term growth across artificial intelligence, cloud computing, digital advertising, e-commerce, and consumer technology. The fund also invests beyond its largest technology holdings, with exposure to financial services, industrial companies, healthcare, consumer businesses, energy, and other sectors.
I like this approach because Vanguard does not need to identify which individual company will lead the market over the next decade. The fund follows the MSCI World ex-Australia Index, so successful businesses can become larger positions while companies that lose relevance gradually become less important.
Another positive is that the annual management fee is 0.18%, which leaves most of the underlying investment return in the hands of investors.
The main concentration is in the United States, which represented 73.6% of the fund at the end of June. Information technology accounted for 30.7%, so weakness among major US technology shares could lead to periods of volatility.
Nevertheless, I think the breadth and quality of the companies inside the VGS ETF make it a strong Vanguard fund to consider over a long holding period.
Vanguard FTSE Asia Ex-Japan Shares Index ETF (ASX: VAE)
The VAE ETF provides a different source of long-term growth through companies listed across Asia, excluding Japan, Australia, and New Zealand.
It held almost 1,900 shares at the end of June. Taiwan, South Korea, China, and India were its largest country exposures, giving investors access to several major Asian economies through a single ASX investment.
The fund's largest holdings included Taiwan Semiconductor Manufacturing Co, Samsung Electronics, SK Hynix, Tencent Holdings, and Alibaba.
I think these holdings provide an attractive mix of semiconductor manufacturing, memory chips, digital platforms, e-commerce, financial services, and consumer growth.
The fund charges a management fee of 0.40% per year, which is higher than the VGS ETF, but it is worth remembering that the fund provides access to markets that can be harder for Australian investors to research and buy directly. So, this higher fee is arguably justified.
Geopolitical tensions, regulation, currency movements, and economic weakness in individual countries can all affect returns, so investors should expect periods of sharp volatility. But I believe the VAE ETF could be a strong long-term buy for investors who want direct exposure to the growth of leading Asian companies.
Foolish takeaway
I think both the VGS and VAE ETF could be strong Vanguard ETF buys now.
The VGS ETF offers broad exposure to many of the world's largest companies, while the VAE ETF provides access to some of Asia's most important economies and technology businesses.
They offer different long-term opportunities, and I would be happy to buy either or both with the intention of holding for many years.
The post Which Vanguard ETFs could be strong buys now? appeared first on The Motley Fool Australia.
Motley Fool contributor Grace Alvino 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, Amazon, Apple, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Tencent. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Alibaba Group. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Microsoft, 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.
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