Could this ASX ETF be the easiest way to invest in global quality?

Picking individual global shares can be difficult.

There are thousands of companies to choose from, and many Australian investors may not have the time or interest to closely follow overseas businesses.

That is where exchange-traded funds (ETFs) can help.

One ASX ETF I think could be a simple way to own a portfolio of high-quality global shares is named in this article.

VanEck MSCI International Quality ETF (ASX: QUAL)

The VanEck MSCI International Quality ETF is one of my preferred ASX ETFs for global exposure.

This fund does not simply buy the biggest companies in the world. It focuses on businesses with quality characteristics, including strong returns on equity, earnings stability, and lower financial leverage.

I like that approach because not every large company is a great business.

Some businesses are highly cyclical. Others rely too heavily on debt. Some have inconsistent earnings or operate in sectors where returns can move around sharply.

A quality filter helps narrow the field. The QUAL ETF gives investors exposure to global companies that have already proven they can generate attractive financial results.

Its holdings currently include world-class names such as Nvidia, Apple, and Microsoft.

But I do not just like the fund because of the famous names.

I like it because it gives investors a rules-based way to own global companies with strong financial traits without needing to decide which one will win next. That is useful because even great businesses can go through periods of weaker performance.

For Australian investors, this ASX ETF can also help balance a portfolio.

The ASX is heavily exposed to banks, miners, supermarkets, infrastructure, and property. Those sectors can be good, but they do not give investors the same access to global technology, healthcare, software, consumer brands, and industrial leaders.

The QUAL ETF can fill some of that gap.

The management fee is higher than that of a basic index ETF, so investors need to be comfortable paying more for the quality screen. There is also no guarantee that quality shares will outperform every year.

In some markets, cheaper cyclical shares or more speculative growth stocks may do better.

But over the long term, I think owning financially strong global businesses is a sensible strategy. Companies with durable profitability and resilient earnings can be very powerful compounders when given enough time.

Foolish Takeaway

I think investing globally is a great thing for a portfolio.

The hard part is building a portfolio that can survive different market conditions and still compound over time.

That is why I like the QUAL ETF. It is not trying to be the flashiest ETF on the ASX. It is trying to give investors access to global quality in a disciplined way.

For a long-term portfolio, I think that can be a very useful building block.

The post Could this ASX ETF be the easiest way to invest in global quality? appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Microsoft, and Nvidia. The Motley Fool Australia has recommended Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.