The ASX is home to more exchange-traded funds (ETFs) than you can poke a stick at. Far from the handful of index funds that were available just a few years ago, today there is an ASX ETF for almost everything you can conjure up in your mind's eye. But ASX ETFs that have returned 30% or more to their investors in 2021 so far? They number far fewer. The VanEck MSCI International Quality ETF (ASX: QUAL) is one.
Yes, in 2021 so far, QUAL units have appreciated by a very healthy 31.2%, rising from $33.46 each at the start of the year to the $43.92 they are commanding at the time of writing. If we include the 38 cents per share dividend distribution that was doled out in July, we can add another percentage point or so to that return.
Considering the S&P/ASX 200 Index (ASX: XJO) has 'only' given investors a gain of 9.9% or so in 2021 so far, this outperformance is hard to ignore. It even bets out the US S&P 500 Index (SP: .INX), which has returned just over 25% in 2021 to date.
So how has the QUAL ETF pulled off a 31% return in 2021?
QUAL ETF knocks out 30%-plus gains in 2021 so far
Well, let's see how it invests. QUAL can be classed as an 'active ETF'. That's because it doesn't track an entire index. It instead pulls 300 individual companies out of the broad MSCI World ex Australia Index, based on "three key fundamental factors". Those are, according to VanEck, high return on equity, stable year-on-year earnings growth, and low financial leverage.
At 72.6%, nearly three-quarters of its current portfolio hails from the United States. However, it still has exposure to Switzerland, Japan, the United Kingdom, Canada and Europe.
QUAL's current top 10 holdings are as follows:
- Microsoft Corporation (NASDAQ: MSFT)
- Apple Inc (NASDAQ: AAPL)
- NVIDIA Corporation (NASDAQ: NVDA)
- Meta Platforms Inc (NASDAQ: FB)
- Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)
- Johnson & Johnson (NYSE: JNJ)
- UnitedHeath Group Inc (NYSE: UNH)
- Adobe Inc (NASDAQ: ABDE)
- ASML Holding NV
- Visa Inc (NYSE: V)
So as you can see, the big US tech names are dominant in the QUAL ETF. Take Microsoft alone, its shares are up more than 50% in 2021 so far. Apple is up almost 35%, while NVIDIA is up more than 116%. No wonder QUAL units have had such a fantastic year of appreciation.
So what does 2022 hold for QUAL? Well, we don't yet know of course. But if you own or are interested in this ETF, it's probably a good idea to keep an eye on its top holdings like Apple, Microsoft and NVIDIA next year. Wherever QUAL's top holdings go, the ETF will likely follow.
The VanEck MSCI International Quality ETF charges an annual management fee of 0.4%.
