There are not too many ASX-listed exchange-traded funds (ETFs) that offer both high passive income and strong capital growth potential for retirees. I believe WCM Quality Global Growth Fund (ASX: WCMQ) could tick all of the boxes – that's why I've started building a position in the fund myself.
The fund manager WCM Investment Management, is in charge of making the investment picks for the ASX ETF – WCM is based in California, far away from the noise of Wall Street.
The WCMQ ETF has numerous positives, so let's get into those to see why it's so appealing for retirees.
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Quality diversification
This fund aims to own between 20 to 40 positions from across the global share market.
Its current portfolio is nicely spread throughout the world, with a 56% allocation to the Americas, 23% to Europe, 17% to Asia Pacific and 4% to 'other'. I like how significantly less of its portfolio is invested in US shares than many other ASX ETFs and managed funds.
The businesses that WCM invests in are not just random names picked from the global share market because they're a particular size or from a certain industry.
This ASX ETF is looking for businesses that the WCM investment team see as having improving/expanding economic moats. In other words, their competitive advantages are strengthening and their ability to generate profit is getting even better over time. It's a great sign for future shareholder returns.
On top of that, the ASX ETF's investment team also want to see that the businesses have a corporate culture that supports improvements in the competitive advantages. I think it's a winning formula.
Solid dividend yield for retirees
This fund aims to provide investors with an annualised distribution yield of a minimum of 5%. While that's not the biggest dividend yield around, I think it's a great middle ground – it provides a solid yield, while not being too high and unsustainable.
As the net asset value (NAV) of the ASX ETF increases, its distribution will increase, so I believe there will be pleasing long-term distribution growth, though it won't necessarily see an increase every single period.
I should also note that the ASX ETF pays quarterly, so investors are getting a pleasing level of payment frequency.
Great returns drives capital growth
Past performance is not a guarantee of future returns, of course. But, the strategy that this fund follows has returned an average of 16.5% per year over the last 10 years (the ASX ETF itself is not 10 years old yet).
Since the ASX ETF's inception, it has returned an average of 14.7% per year from August 2018 to April 2026. If it can continue to deliver good double-digit returns, then the fund can deliver both a good yield and the remainder of the return will translate into good capital growth for investors.
With its investment strategy and long-term track record, I'm optimistic it can perform well in most economic environments, making it a useful long-term pick for retirees.
