Here are two quality ASX-listed exchange-traded funds (ETFs) that I’d love to buy in September 2021.
ETFs are a great way to invest in large numbers of shares. But I think some ETFs are better than others, like these two:
WCM Quality Global Growth Fund (ASX: WCMQ)
This ETF is a managed fund. The manager is WCM Investment Management, which is based in California, USA.
The investment philosophy is to look for two things with a business.
First, WCM looks for businesses that have an expanding economic moat. In other words, the competitive advantage is getting stronger. But it’s not the size of the moat, it is more about the direction that moat is going. If the business is becoming stronger, then it has a good chance of producing attractive returns.
The second factor it looks for is a culture at the business that supports the expansion of that moat. A business that fosters a mentality of making the competitive advantage stronger is more likely to be successful with that goal.
It has been very successful with this strategy. Since the ETF’s inception in August 2018, it has returned an average of 23% per annum, after all fees. That’s pretty solid, though the next three years may not be as strong.
The portfolio is diversified, with 61% invested in the Americas (including South America) and the rest in other places around the world.
In terms of the actual shares it owns, the biggest five positions at the end of July 2021 were: Stryker (NYSE: SYK), Shopify (NASDAQ: SHOP), West Pharmaceutical Services (NYSE: WST), Sherwin-Williams (NYSE: SHW) and LVMH (EPA: MC). These are quality names with long-term growth potential.
Betashares Global Quality Leaders ETF (ASX: QLTY)
I think this ETF could be one of the highest quality options on the ASX.
For consideration to make it into this portfolio, those businesses have to rank well on return on equity, debt-to-capital, cash flow generation ability and earnings stability. When you cut out the businesses that don’t rank well on these factors, what’s left is a high quality list.
There are a total of 150 positions in the portfolio from countries around the world. That’s an attractive amount of diversification.
At 1 September 2021, the 10 biggest positions are: Advanced Micro Devices (NASDAQ: AMD), Nvidia (NASDAQ: NVIDIA), Adobe (NASDAQ: ADBE), Keyence (TYO: 6861), Accenture (NYSE: ACN), Intuit (NASDAQ: INTU), Novo Nordisk (NYSE: NVO) Facebook (NASDAQ: FB), Alphabet (NASDAQ: GOOGL) and Cisco Systems (NASDAQ: CSCO).
Investors can get access to this investment for an annual management fee of just 0.35%.
Returns have been solid. Since inception in November 2018, the ETF has delivered an average return per year of 22.9% per annum.
