I'm a big believer that ASX shares can generate good returns and build my wealth. However, many ASX companies are focused on generating earnings from Australia (and New Zealand). Certain ASX-listed exchange-traded funds (ETFs) can help with geographic diversification.
I like selecting ASX companies for my portfolio, such as Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Ltd (ASX: BKW), WAM Microcap Ltd (ASX: WMI) and Bailador Technology Investments Ltd (ASX: BTI). However, the ASX only accounts for around 2% of the global share market, and I want to ensure I gain exposure to some of the best businesses in the other 98%.
The VanEck MSCI International Quality ETF (ASX: QUAL) is one way I'm trying to benefit from top global companies.
Here's why it appeals to me and why I'm going to buy more in the next few weeks.
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High-quality companies in a diversified portfolio
There are many thousands of companies listed in various countries, such as the United States, Canada, the United Kingdom, the Netherlands, Switzerland, France, and so on. I don't necessarily want to own shares in all of them, just the great ones.
Any business considered for this ASX ETF should have a high return on equity (ROE), earnings stability, and low financial leverage.
Making strong and consistent profits for shareholders while having a very healthy balance sheet is a great combination. Having a whole portfolio of global companies that tick the boxes sounds good to me.
The QUAL ETF holds businesses from various countries, including Italy, Germany, Canada, Ireland, Sweden, France, Denmark, the Netherlands, Japan, the UK, Switzerland, and the US. That's a lot of good diversification, in my view.
Great returns
The QUAL ETF has performed very well over the long term, though that is not guaranteed to continue in the future.
In the ten years to December 2024, the QUAL ETF has returned an average of 15.6% per annum, which is excellent.
It'd be wise to be conservative and not expect as big returns in the next decade. But, with how the portfolio is set up, I'm optimistic it can outperform the S&P/ASX 200 Index (ASX: XJO).
Reasonable fees
The ETF has an annual management fee of 0.40%, which isn't the cheapest around, but the most important thing is the net returns, which have been appealing and could continue to be.
A lot of research and effort has gone into constructing this portfolio, so I think the management fees are reasonable.
