ASX ETFs are a great way to invest in a group of shares in a single investment. There are a few exchange-traded funds (ETFs) I’ve got my eyes on.
It can be riskier to own one single business compared to a portfolio of an ASX ETF.
But, I’d prefer to only own great businesses rather than below-average ones. That’s why I like funds that provide exposure to a portfolio that’s purely focused on higher-quality names, along with providing diversification.
That’s why I like the ideas below.
VanEck MSCI International Quality ETF (ASX: QUAL)
This fund looks across the world for the highest-quality companies that can be judged on numerical values.
The QUAL ETF owns a portfolio of approximately 300 companies across a range of geographies, sectors and economies.
These 300 businesses are judged on three key aspects – having a high return on equity (ROE), earnings stability and low financial leverage.
That means the business makes a lot of profit for shareholders, the profit doesn’t usually go down and it has low levels of debt.
I like that the US makes up less than three-quarters of the portfolio because it means other countries also have a good representation in the portfolio such as Switzerland, the UK, Japan, the Netherlands, Germany, Canada and France.
But, the biggest positions are still those impressive US giants like Apple, Meta Platforms, Nvidia, Microsoft, Eli Lilly, Visa and Alphabet, so it offers the best of both worlds, in my opinion.
We can’t expect future performance to continue at the same strength as past performance, but it has been very consistent.
It has returned an average of 14.9% per year over the last decade and 15.2% per year in the past five years.
WCM Quality Global Growth Fund ETF (ASX: WCMQ)
This is an actively-managed fund that also looks to invest in high-quality businesses.
WCM wants to invest in businesses with a great economic moat and the moat is getting even stronger. It’s the direction of the moat that matters the most to WCM, not the size.
I like that strategy to find shares like that because it suggests the business is becoming increasingly profitable over time, which means that the shareholder returns could accelerate, particularly if the market hasn’t identified how much earnings could grow.
Additionally, the fund manager wants to find businesses that have a corporate culture which helps build the economic moat.
This strategy has led it to deliver an average return per year of 13.4% over the prior five years, while the strategy it follows has returned an average of 16.6% per year.
Some of its biggest holdings include Siemens Energy, AppLovin, Taiwan Semiconductor, Western Digital, Rolls-Royce, Coming and Amazon.com.
I think this is a very good ASX ETF to own for long-term returns and I also like how it targets a dividend yield of 5%.
