After a shaky start to the year for global markets, one investment theme is standing out above the rest: quality.
And according to Bell Potter, 2025 could be the perfect time for investors to shift their focus toward high-quality ASX shares with proven fundamentals.
In its latest strategy note, Bell Potter makes a compelling case for taking a "preference to quality" in the current environment, citing "economic uncertainties, geopolitical tensions, and anticipated slower growth" as key reasons to tilt portfolios toward businesses that can hold their ground through turbulence.
Why quality matters now
Bell Potter highlights four key characteristics that make quality shares so attractive right now, these are earnings stability, strong balance sheets, sustained high profitability, and competitive advantages.
These traits are particularly valuable when markets are volatile and the outlook is cloudy — as they are today.
In fact, quality shares have historically outperformed during major market disruptions like the GFC, COVID-19, and periods of trade war uncertainty. The broker notes that "quality investing has historically outperformed during significant economic disruptions, including the GFC, European debt crisis, COVID and Trump 1.0 trade tensions."
A safe harbour in uncertain times
With markets once again grappling with trade tensions and policy risks, Bell Potter believes quality offers investors "the best of both worlds under a Trump-led scenario—providing downside protection if trade tensions escalate, while remaining well-positioned should tariffs be watered-down and growth slows, rather than stalls."
It is that kind of asymmetric return profile that makes a focus on quality so attractive right now. Bell Potter notes that: "Quality equities offer an asymmetric return profile, capturing steady upside during growth periods but crucially providing downside protection in declining markets."
How to invest in quality with ASX shares
For investors looking to act on this theme, two ASX ETFs stand out:
Betashares Australian Quality ETF (ASX: AQLT)
This ASX ETF offers exposure to a portfolio of high-quality local companies based on profitability, earnings stability and low financial leverage. It's a simple way to tap into the ASX's best operators without having to pick individual stocks.
Betashares Global Quality Leaders ETF (ASX: QLTY)
This popular fund provides access to a hand-picked portfolio of 150 of the world's strongest businesses — all ranked by their quality scores. For long-term investors seeking global diversification, this ASX ETF brings together best-in-class companies in a single, cost-effective investment.
Foolish takeaway
With geopolitical tensions simmering and market volatility remaining high, Bell Potter's message is clear: now is the time to lean into quality. And it is hard to argue against this.
