I think this is a great time to invest in ASX ETFs with better prices and the ability to gain access to great businesses.
Exchange-traded funds (ETFs) can give us good exposure to markets outside of Australia, diversification to different industries and (historically) good returns.
With tariff wars building and uncertainty growing, I think it could be a good idea to lean towards investments that are strong, quality and can succeed even if conditions make it harder to achieve profit growth.
Having said that, I’d point to two ASX ETFs as opportunities that tick the boxes and their unit prices have dipped recently.
Betashares Global Quality Leaders ETF (ASX: QLTY)
This fund invests in 150 global companies ranked by the highest quality score.
There are four factors that businesses need to score well on – return on equity (ROE), debt to capital, cash flow generation ability and earnings stability. When you put those four factors together, they are powerful businesses.
Some of the biggest positions in the ASX ETF’s portfolio include Progressive, Johnson & Johnson, Visa, Coca-Cola, Cisco Systems, Netflix and Costco.
The returns have been solid, in my opinion. In the last five years, it has returned an average of 13.7% per year.
In terms of sector weightings, its biggest position is IT with a 34.5% allocation, with industrials having a 17.5% allocation and financials having a 10.6% position. Having the most invested in IT businesses sounds good to me for the long-term.
I like that the US only accounts for 69% of the portfolio, which is lower than many other global ASX ETFs. Overall, I like this fund.
VanEck MSCI International Quality ETF (ASX: QUAL)
At first glance, this fund is quite similar to the first one.
To enter this portfolio, businesses should have a high return on equity, earnings stability and low financial leverage.
It’s invested in more businesses, with approximately 300 holdings from around the world.
Its largest positions have a bigger weighting. The QLTY ETF’s biggest position is a 2.4% allocation, whereas the QUAL ETF has seven positions that have a weighting of at least 2.6%.
Meta Platforms (5.7%), Apple (5.25%), Microsoft (4.7%) and Nvidia (4%) all have a weighting of at least 4%.
It could be a good thing to have a larger position in these businesses because of how strongly they have performed and could perform in the future. They’re great businesses with global reach and strong outlooks with their products.
While the fund is more focused on US shares (with a 77% overall allocation), there’s still international diversification and I think it’s a good thing to have a high weighting to those US tech giants.
In the last five years, this ASX ETF has returned an average of 16.5% per year, though that’s not certain to continue.
