Betashares Australian Quality ETF (ASX: AQLT) closed at $35.09 on Tuesday, up 0.49% for the day and up 13.6% in the year-to-date.
ETF provider, Betashares says AQLT is the best-performing exchange-traded fund (ETF) within its stable for 2025 so far.
Betashares investment strategist, Tom Wickenden, explains why.
AQLT ETF the best performer for Betashares in 2025
AQLT ETF is invested in 40 ASX shares weighted according to quality metrics — not market capitalisation.
The three metrics are high return on equity (ROE) (strong profits relative to shareholder investment), earnings stability (consistent and predictable profits over time), and low levels of leverage (minimal use of debt, thereby reducing risk).
Wickenden said:
This translates to higher exposure to names like Telstra Group Ltd (ASX: TLS) and Macquarie Group Ltd (ASX: MQG) and lower exposure to BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA), alongside quality-tilted names from the mid and small caps … including Pro Medicus Ltd (ASX: PME), HUB24 Ltd (ASX: HUB) and Breville Group Ltd (ASX: BRG).
AQLT seeks to mirror the performance of the Solactive Australia Quality Select Index.
Wickenden said AQLT's quality tilt "helped soften a tough ASX reporting season" for investors.
Outperformance of AQLT's shareholdings during earnings season
In an article, Wickenden said overall ASX 200 company earnings fell for the second consecutive year, down by an average of 1.7%.
By contrast, 28 companies among the 40 in the AQLT ETF portfolio that reported last month delivered average profit growth of 14.5%.
Wickenden said AQLT did not hold many of the ASX 200 large-cap shares that experienced major price falls after releasing their results.
Specifically, Wickenden said the ETF had screened out Woolworths Group Ltd (ASX: WOW), James Hardie Industries plc (ASX: JHX), AGL Energy Limited (ASX: AGL), and Amcor CDI (ASX: AMC).
However, AQLT does hold the ASX 200's top 10 shares by market cap, including CSL Ltd (ASX: CSL), which has lost a quarter of its value in the weeks following its report.
Wickenden said many of the shares included in the AQLT ETF portfolio – ranging from well-established companies to lesser-known mid-caps – had helped it outperform the broader market since its inception in April 2022.
Since inception, the AQLT has delivered an average annual return (including dividends) of 14.5%.
More about AQLT
Currently, AQLT's top holdings are Wesfarmers Ltd (ASX: WES) at 6.5%, BHP Group Ltd (ASX: BHP) at 6%, Telstra Group Ltd (ASX: TLS) at 5.5%, National Australia Bank Ltd (ASX: NAB) at 5%, and Australia and New Zealand Banking Group Ltd (ASX: ANZ) at 5%.
The highest sector allocations are financials (37%), consumer discretionary (14%), materials (14%), and healthcare (10.5%).
The AQLT ETF pays dividends (called 'distributions') twice per year.
The management fee is 0.35% per annum.
Check out the other top performing ETFs within the Betashares product range here.
Should you buy AQLT ETF?
On The Bull this week, Andrew Wielandt from DP Wealth Advisory gave AQLT ETF a buy rating.
He commented:
The fund targets companies with a high return on equity, low leverage and relative earnings stability.
Fund returns after fees stood at 23.5 per cent for the 12 months to August 29.
I hold this ETF in my self managed super fund.
How does AQLT compare to ASX NDQ?
One of the most popular ASX ETFs in the Betashares stable is the Betashares NASDAQ 100 ETF (ASX: NDQ).
About $7 billion is invested in the NDQ compared to just $719 million in the AQLT ETF, according to the latest ASX data.
In the year to date, the NDQ ETF has risen 6% — less than half of AQLT's growth.
