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Highlights
- ETFs provide global market exposure and diversification.
- Quality-focused ETFs offer resilience amid market uncertainty.
- Two ASX-listed ETFs have shown strong historical performance.
Investors looking for diversified opportunities in the stock market often turn to exchange-traded funds (ETFs). These funds allow exposure to a broad range of companies across various industries and geographies, reducing individual stock risk. With recent market shifts and global economic uncertainties, ETFs focused on high-quality businesses may present strong long-term potential. Two ASX-listed ETFs that follow a quality-focused strategy have recently seen a dip in their unit prices, making them worth watching in March 2025.
Betashares Global Quality Leaders ETF (ASX:QLTY)
The Betashares Global Quality Leaders ETF (ASX:QLTY) is structured to provide exposure to 150 high-quality companies worldwide. These businesses are selected based on four critical financial metrics: return on equity (ROE), debt-to-capital ratio, cash flow generation, and earnings stability. Companies excelling in these areas tend to be more resilient and capable of sustaining long-term growth.
Among the key holdings in this ETF are Progressive (NYSE:PGR), Johnson & Johnson (NYSE:JNJ), Visa (NYSE:V), Coca-Cola (NYSE:KO), Cisco Systems (NASDAQ:CSCO), Netflix (NASDAQ:NFLX), and Costco (NASDAQ:COST). The portfolio has delivered a strong performance historically, with an average annual return of 13.7% over the last five years.
Sector-wise, the fund is heavily allocated toward information technology (34.5%), followed by industrials (17.5%) and financials (10.6%). Unlike many other global ETFs that have a larger allocation to the U.S. market, this fund’s U.S. exposure is around 69%, offering a slightly more diversified international mix.
VanEck MSCI International Quality ETF (ASX:QUAL)
The VanEck MSCI International Quality ETF (ASX:QUAL) follows a similar approach, emphasizing companies with high return on equity, stable earnings, and low financial leverage. However, this ETF includes a broader portfolio of approximately 300 holdings worldwide.
The fund’s largest positions hold greater individual weight compared to QLTY. Some of the biggest allocations include Meta Platforms (NASDAQ:META) at 5.7%, Apple (NASDAQ:AAPL) at 5.25%, Microsoft (NASDAQ:MSFT) at 4.7%, and Nvidia (NASDAQ:NVDA) at 4%. These companies have demonstrated strong historical performance and continue to be leaders in their respective industries.
This ETF has a higher U.S. market allocation at 77%, primarily due to its exposure to dominant technology firms. Over the past five years, it has delivered an average annual return of 16.5%. While past performance is not a guarantee of future results, the strong historical track record of these holdings suggests potential for continued resilience and growth.
Final Thoughts
ETFs with a focus on quality companies provide a way to gain diversified exposure to global markets while investing in businesses with strong financial foundations. The recent dip in unit prices for these two ETFs could present an opportunity for those seeking long-term investments. With their focus on financially sound businesses and historical performance, both ASX:QLTY and ASX:QUAL remain noteworthy options in the ETF landscape.
