Most of us would probably love to own an ASX share portfolio consisting solely of the world's best businesses. But that is, of course, easier said than done.
Sifting through hundreds of companies looking for the best examples of quality compounders is a monumental task, and not everyone has the time or temperament for it.
Luckily, we can use ASX exchange-traded funds (ETFs) to help us. There are a number of ASX ETFs that try and invest only in the best businesses in the world. As such, I think these two funds are well worth a look for anyone searching for a robust portfolio packed with high-quality businesses.
Two ASX ETFs that invest in the world's best businesses
VanEck MSCI International Quality ETF (ASX: QUAL)
As it says on the tin, this ASX ETF focuses on holding companies that it judges to have the highest-quality business models. To assess this quality, VanEck uses fundamental metrics like a high return on equity, earnings stability, and low financial leverage.
So it will come as no surprise that QUAL's top holdings include names like Apple, Microsoft, Nvidia, Visa, and Costco Wholesale. That's among an underlying portfolio of approximately 300 stocks hailing from more than a dozen different countries.
This ETF charges an annual management fee of 0.4%. It has returned an average of 15.77% per annum (as of 31 March) since its inception in 2014.
BetaShares Global Cash Flow Kings ETF (ASX: CFLO)
Next up, we have a fund from provider Betashares. The Global Cash Flow Kings ETF identifies quality companies by the levels of free cash flow that they generate, and narrows down the field by screening for high debt levels.
This is a great metric to use if one is looking for the best businesses in the world, as companies with high rates of free cash flow generation tend to have exceptional business models.
Again, we can see this philosophy come to life with CFLO's holdings. Its top positions include Alphabet, Adobe, Procter & Gamble, and Nintendo, not to mention Warren Buffett's Berkshire Hathaway.
This ASX ETF holds roughly 200 underlying shares, most of which come from the US markets.
The Betashares Global Cash Flow Kings ETF charges a management fee of 0.4% per annum as well. This ASX ETF has returned an average of 15.11% per annum since its inception in 2023.
