There is one exchange-traded fund (ETF) that I would definitely want to buy if I had $1,000 to invest into it.
ETFs are a great way to invest in my opinion, but I believe that there may be better picks than ones like Vanguard Diversified High Growth Index ETF (ASX: VDHG) and BetaShares Australia 200 ETF (ASX: A200).
I think ETFs that give exposure to a high quality group of businesses could perform better over the longer-term than the ones that are generalised.
There is one in-particular that I really like:
Betashares Global Quality Leaders ETF (ASX: QLTY)
This ETF is about a portfolio of quality businesses from across the world.
Typically, a portfolio should have dozens of holdings to be effectively diversified. This ETF has around 150 holdings.
Those businesses are spread across the world. Numerous countries are represented: the US (61.6% of the portfolio), Japan (12.6%), Switzerland, Hong Kong, Denmark, France, the UK, Germany and Netherlands all have positions of 2% of more.
What makes the portfolio quality?
There are many different metrics on how to judge a business. But if a company can rank well on several
of those metrics then they may be very worthwhile investments.
The Betashares Global Quality Leaders ETF ranks well on several on those quality metrics: return on equity (ROE), debt to capital, cashflow generation and earnings stability.
When you put those metrics together, the combination of those businesses – and don’t forget there’s 150 of them – can do very well.
Top holdings
Here are the biggest ten positions in the portfolio: Advanced Micro Devices, Accenture, Intel, Novo Nordisk, Roche, SAP, Texas Instruments, UnitedHealth, Visa and Applied Materials.
Returns and management fee
Since inception in November 2018, the QLTY ETF has produced net returns of 21% per annum. It would be too optimistic to think that the next few years will be as strong, but I do think it can continue to outperform.
It’s attractively cheap too, when it comes to the management cost it’s only 0.35% per year.
I believe the QLTY ETF can form a core part of a portfolio.
