Why the VanEck MSCI International Quality ETF (QUAL) looks to me like a great long-term buy

Let's go global with an investment portfolio.

| More on:
A woman looks quizzical while looking at a dollar sign in the air.

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

The VanEck MSCI International Quality ETF (ASX: QUAL) could be one of the leading exchange-traded funds (ETFs) on the ASX for a long-term buy because of a number of attributes.

I'm a firm believer that Australians should own some investments that provide international diversification because Australia makes up only a small part of the global economy. By extension, the ASX is only a small part of the global share market.

In my mind, the easiest way to invest in the global share market is to buy an ETF on the ASX that is invested in global shares. That said, I'd prefer to only invest in businesses that are rated high-quality. The QUAL ETF ticks my boxes for a number of reasons.


The ASX ETF is invested in a total of 300 businesses outside Australia. As such, its portfolio offers ample diversification in terms of how many holdings it has. Even at 100 holdings, it would be enough to provide investors with good diversification.

These businesses come from many countries. As at June 2023, the US made up the largest allocation with a weighting of around 75%, with a number of other countries having weightings of more than 1% These are Switzerland (6.2%), Japan (3.7%), the UK (2.9%), the Netherlands (2.8%), Denmark (2.8%), Ireland (1.7%), Canada (1.5%), and France (1.3%).

With the investment characteristics this ETF looks for, there are only three sectors that have a double-digit weighting. IT had a 32.4% weighting, healthcare had a 20.2% weighting, and industrials had a 12.9% weighting.

Quality attributes

As I've mentioned, this ASX ETF looks to invest in quality businesses. In fact, it aims to invest in the "world's highest-quality companies".

To be included in the portfolio, there are three fundamentals the QUAL ETF demands: a high return on equity (ROE), earnings stability, and low financial leverage.

What this means is that the businesses generate good profit for how much shareholder money is retained in the business. They also don't suffer from significant profit declines and they have good balance sheets with low levels of debt.

Some of the biggest positions in the portfolio include Nvidia, Apple, Microsoft, Meta Platforms, Visa, and Alphabet.


Past performance is not a guarantee of future returns. Having said that, the QUAL ETF has performed very well for investors and I think its investment style can deliver continuing growth.

Over the past five years, the EFT has gone up by an average of 14.7% per annum.

No one can say what's going to happen next with share prices but over the long term, I believe this ETF will be able to achieve pleasing numbers because of the quality of the underlying businesses.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, 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 Apple, Meta Platforms, Microsoft, and Nvidia. The Motley Fool Australia has recommended Apple, Meta Platforms, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

The letters ETF sit in orange on top of a chart with a magnifying glass held over the top of it

Meet the ASX's new NASDAQ ETFs

The ASX has just seen its Nasdaq ETF count double.

Read more »

child in superman outfit pointing skyward, indicating a rising share price

Is the Vanguard Australian Shares Index ETF (VAS) a good buy for beginners?

Should new investors start with the VAS ETF?

Read more »

A businessman holding a world globe in one hand, representing global investment.

These ASX ETFs could be world class options in February

These ETFs could give your portfolio a boost in 2024. Here's what you need to know about them.

Read more »

Woman on her phone with diagrams of tech sector related elements linking with each other.

Here are 3 exciting ASX tech ETFs to buy right now

These ETFs give investors access to some quality tech stocks.

Read more »

A smiling little boy helps his father plant a tree, indicating that big things grow from a small beginning.

I'm planning to buy this top ASX ETF for my child

This investment ticks many of the boxes I’m looking for.

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.

Buy and hold these ASX ETFs for 10 years or more

These ETFs could be top long term investments. But what are you buying?

Read more »

a couple clink champagne glasses on board a private aircraft with gourmet food plates set in front of them. They are wearing designer clothes and looking wealthy.

How this rocketing ASX ETF is tapping into the billionaire-making AI revolution

The AI revolution has added billions more dollars to the fortunes of dozens of billionaires in 2024.

Read more »

Suncorp share price Businessman cheering and smiling on smartphone

3 ASX ETFs for smart investors to buy

These ETFs have delivered strong returns for unitholders.

Read more »