Certain ASX-listed exchange-traded funds (ETFs) could be great buys today because of everything that's happening in the global share market amid worries about how AI could impact various businesses.
How are we supposed to invest during times like this? Well, it could be a compelling idea to look at businesses that have been heavily sold off, and consider whether the decline has been overdone.
It may also be a smart idea to look at investments that are high-quality and can continue delivering good returns over time.
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Betashares Global Quality Leaders ETF (ASX: QLTY)
This portfolio aims to give investors exposure to a portfolio of 150 global stocks.
For a business to be chosen for this portfolio, there are four elements that decide how high-quality it is.
First, there's the return on equity (ROE) – how much profit it generates compared to how much shareholder money is retained within the business.
Second, the debt-to-capital ratio. Is the balance sheet healthy in terms of how much debt it has?
Third, does it have good cash flow generation ability? It's important for profit to translate into money hitting the bank account.
Fourth, are earnings stable? If profit doesn't typically fall, that's good downside protection and a tailwind for capital gains.
These 150 businesses come from a variety of countries and sectors, giving the business diversification – it's not just a tech fund.
Returns have been solid over the long-term – it returned an average of 13.8% per year between November 2018 and January 2026.
Global X S&P World Ex Australia GARP ETF (ASX: GARP)
This ASX ETF aims to give investors exposure to a high-quality portfolio of great businesses that are trading at great prices. GARP stands for growth at a reasonable price.
The portfolio has 250 names in it, which come from multiple countries and sectors, so this fund can also provide pleasing diversification.
There are multiple elements that go into deciding which businesses can make it into this portfolio.
For starters, potential businesses need to have a good level of growth. So, the 3-year sales per share and earnings per share (EPS) growth are considered.
They need to be trading at good value, so the ASX ETF looks at the earnings to price ratio, which is another way of evaluating the price/earnings (P/E) ratio.
Finally, the companies must be high-quality. So, the fund looks at the financial leverage (meaning debt levels) and return on equity of the businesses involved.
The GARP ETF has returned an average of 18% since inception in September 2024, so the strategy is working. But, past performance is not a guarantee of future performance. Even so, I'm optimistic about this ASX ETF's future.
