The VanEck MSCI International Quality ETF (ASX: QUAL) is one of my preferred international ETFs, I think there are plenty of good reasons to own it.
This fund is offered by a leading ETF provider, VanEck and it’s designed to give investors exposure to 300 of the highest quality businesses. Sounds good right? Let’s talk about why it’s such an appealing option.
Fees
This is probably the least important factor of the three reasons, but I think it’s very good to know that the QUAL ETF has relatively low fees for the sort of investment screening process that it utilises.
The QUAL ETF annual management fee is just 0.40%, whereas plenty of active fund managers would charge at least a 1% management fee and then outperformance fees on top of that, if they beat the market, which isn’t always achieved.
Quality
The key to this investment is that it provides access to the world’s highest-quality companies on key fundamentals, which includes a high return on equity (ROE), earnings stability and low financial leverage.
In other words, its balance sheet doesn’t have a lot of debt for the company’s size, earnings are usually resilient and growing, and the business makes a lot of profit for how much shareholder funds are inside the company.
By combining these different factors, you’re left with a very strong portfolio of businesses that have the potential to perform well and can continue reinvesting into their operations and make a large annualised return on that invested money, which could unlock further appealing returns for investors.
Returns
Speaking of returns, the proof is in the pudding, and this is the end result of a good investment process. Considering the diversified and non-tech-focused nature of the portfolio, I’d say it has been one of the best performers over the last few years.
According to VanEck, the QUAL ETF has returned an average of 16.5% per year since October 2014. I’m not expecting the next ten years to be as good, however I do believe the returns can continue to be pleasing.
I think the QUAL ETF is one of the leading ASX ETFs to own for the long-term and I’d be a very happy investor if it were in my portfolio.
