In my books, the Betashares Global Quality Leaders ETF (ASX: QLTY) is an excellent ASX-listed exchange-traded fund (ETF).
There are plenty of ETFs on the ASX to choose from. Many are focused on a certain stock market geography, while others are focused on a particular industry, index or investment theme.
For me, the QLTY ETF ticks my 'desired investment' boxes in ways that most of the others don't. Let's take a look.
True diversification
The QLTY ETF could act as a core position in a portfolio because of its diversification across numerous companies and many countries.
The portfolio comprises 150 global companies outside of Australia, a positive simply because of the vast number of excellent companies and opportunities outside our home market.
Around two-thirds of the ASX ETF's portfolio is invested in US-based companies. Other countries with a weighting over 1% in late March are Japan (11.4%), the Netherlands (4%), France (3.5%), Denmark (2.6%), the UK (2%), Switzerland (1.8%), Canada (1.4%) and Sweden (1.1%).
In terms of industries, I like the mix of the weightings, with the biggest allocation to sectors like IT, industrials and healthcare which may deliver more growth compared to financials, mining or energy.
High-quality bias
The QLTY ETF invests in high-quality businesses, offering exposure to a higher-quality portfolio than the overall global share market.
A business must rank well on four measures to be chosen for this portfolio: return on equity (ROE), debt-to-capital, cash flow generation, and earnings stability. The combined score of those four metrics decides which businesses make it into the ASX ETF's portfolio.
Those metrics are excellent financial measures to judge a business' quality – the good ones can hopefully deliver better profit performance over time and support shareholder returns.
Its largest holdings right now are Alphabet, Microsoft, Meta Platforms, Cisco Systems, Servicenow and Applied Materials.
Low fees and good returns
Fees can play a sizeable part in the overall return of a fund investment, which is partly why options like Vanguard Australian Shares Index ETF (ASX: VAS) and iShares S&P 500 (ASX: IVV) are appealing.
With an annual management fee of 0.35%, the QLTY ETF isn't the lowest fee around, but I think it's reasonable considering how much work has gone into constructing the portfolio.
Past performance is not a guarantee of future performance, particularly in the short term, but the QLTY ETF delivered an average annual return of 15.6% over the five years to 28 March 2024.
