The iShares S&P 500 ETF (ASX: IVV) is one of the largest ASX-listed exchange-traded funds (ETFs).
I think it's one of the most appealing ETFs due to its low costs and the exposure it provides to a portfolio of strong, American-listed businesses.
However, as time goes on, the IVV ETF is becoming increasingly concentrated on just a few names including Microsoft, Nvidia, Apple, Amazon, Alphabet, Meta Platforms, Broadcom and Berkshire Hathaway.
It's a great thing to be invested in these businesses. However, for investors wanting more diversification (not less), it could be an idea to add other ASX ETFs that can also perform well, while proving exposure to different businesses.
Betashares Global Quality Leaders ETF (ASX: QLTY)
This fund aims to look for the highest-quality companies from across the world. It does that by looking at four key factors.
Those four attributes which businesses must rank well on include return on equity (ROE), debt to capital, cash flow generation and earnings stability.
In other words, they make strong profits compared to the amount of shareholder money retained within the business, they have low debt, they generate strong cash flow and their earnings typically don't go backwards.
Its 150 holdings are much more evenly weighted than the IVV ETF.
Currently, the biggest holdings in QLTY ETF (with a weighting of 2.1%) are Cisco Systems, Palo Alto Networks, LAM Research and Netflix.
About two-thirds of the portfolio is invested in US-listed shares and the other third is invested in markets like Japan, the Netherlands, France, the UK, Denmark, Switzerland, Hong Kong and Spain.
Past performance is not a guarantee of future performance, but the QLTY ETF has returned an average of 14.9% per annum since inception in November 2018.
VanEck MSCI International Small Companies Quality ETF (ASX: QSML)
I think it's worthwhile that investors consider owning some smaller businesses too because of their ability to produce stronger returns than larger, more mature ones.
This fund provides exposure to 150 international quality small-cap shares from developed markets.
There are three factors that businesses must display to be considered for the portfolio: a high ROE, earnings stability and low financial leverage.
Around 80% of the ASX ETF's portfolio is invested in US-listed shares, but companies from the UK, Japan, Switzerland, Sweden, France, Mexico, Bermuda, Israel, and Finland are also represented.
I think the businesses in this portfolio have a lot of attractive features which have helped them perform strongly. Again, past performance is not a guarantee of future returns. However, the QSML ETF has returned an average of 16.25% per year over the last three years.
