Betashares Global Quality Leaders ETF (ASX: QLTY) is one of my favourite exchange-traded funds (ETFs) on the ASX.
One of the most challenging things about investing solely on the ASX share market is that many of the large companies have nearly all of their operations in Australia (and New Zealand).
I believe it’s a good idea to get diversification to different companies and economies. The Australian economy may not always be a great place to be invested, particularly if global iron ore and coal demand reduces in the coming years.
Australians would be wise to invest in global shares for diversification, in my opinion. The QLTY ETF from BetaShares could be one of the very best choices for a few different reasons.
High-quality
If Aussies buy an ETF that’s invested across the entire global share market, they’ll be buying a piece of thousands of businesses. Maybe we don’t need to own all of those businesses because it dilutes the overall quality of the average business you’re getting. How about just owning the best businesses that are out there? That’s what this ETF is trying to do.
For a company to make it into this ETF’s portfolio it needs to rank well on four characteristics. Those four are: return on equity (ROE), debt-to-capital, cashflow generation and earnings stability. Putting those things together is a powerful combination, in my opinion. You’re talking about the best of the best if a company is good at all four of those things.
Diversification
The QLTY ETF does still have a diversified portfolio thanks to its portfolio having 150 holdings, which I think gives ample diversification.
These businesses come from a variety of countries including the US (69.2% of the ETF’s allocation), Japan (12.1%), the Netherlands (3.5%), France (3.1%), the UK (2.3%), Denmark (2.1%) and so on.
In terms of the industry exposure, IT has the biggest exposure with a weighting of 34.9%, which I think is a positive thing. Other sizeable allocations include industrials (17.5%), financials (10.6%), consumer staples (9.5%), consumer discretionary (8.9%), healthcare (8.6%) and communication services (8%).
Great returns
The results speak for themselves, in my opinion.
Since inception in November 2018, the QLTY ETF has delivered an average return per annum of 15.6%, outperforming the global share market by an average of 0.75% per year. That can make a large difference to our wealth over time.
I think this fund is right up there with the best on the ASX for its offering of both good returns and useful diversification, I’d be very happy if it were in my portfolio.
