QLTY - BetaShares Global Quality Leaders ETF

Crunchy · 9 November 2018

Hi all,

Just seeking some input or thoughts from others regarding Betshares new QLTY ETF as I am not really knowledgeable enough to make any serious conclusions myself. In summary:

The Fund seeks to provide investors with exposure to a diversified portfolio of quality global companies (ex-Australia) with high return on equity and profitability, low leverage and earnings stability. The Fund aims to track the performance of an index (before fees and expenses) that comprises 150 global companies ranked by highest quality score.

Worth noting that their "quality score" is based on:

return on equity;
debt-to-capital;
cash flow generation ability, and;
earnings stability.

I'm interested primarily because what I hold at this point in time is highly diversified (and kind of boring), and I am looking at some options for more specific investments without resorting to stock picking...yet. Could this form part of a decent ETF portfolio?

Cheers!

Ann · 9 November 2018

It has just listed Crunchy, as I am sure you are aware. It sounds great until you really look at it. It is 57.8% US stocks and 50% of the fund's stocks are made up of 28.1% info tech and 21.4% healthcare. Their top 10 holdings are as follows...
Walt Disney Co. 2.2% Apple Inc 2.1%
Intel Corp 2.2% Unilever 2.1%
Johnson & Johnson 2.2% Costco Wholesale Corp. 2.0%
United Health Group Inc 2.1% Facebook Class A 2.0%
Roche Holdings 2.1% Visa Inc. CL A 2.0%

If the US has a bit of a retrace which is quite possible, I think this fund would be hit hard especially being so new to the exchange. It looks like just another US ETF with a potpourri of Japanese and a few small global contributions thrown in for window dressing.

Crunchy · 10 November 2018

Ann said:
It has just listed Crunchy, as I am sure you are aware. It sounds great until you really look at it. It is 57.8% US stocks and 50% of the fund's stocks are made up of 28.1% info tech and 21.4% healthcare. Their top 10 holdings are as follows...
Walt Disney Co. 2.2% Apple Inc 2.1%
Intel Corp 2.2% Unilever 2.1%
Johnson & Johnson 2.2% Costco Wholesale Corp. 2.0%
United Health Group Inc 2.1% Facebook Class A 2.0%
Roche Holdings 2.1% Visa Inc. CL A 2.0%

If the US has a bit of a retrace which is quite possible, I think this fund would be hit hard especially being so new to the exchange. It looks like just another US ETF with a potpourri of Japanese and a few small global contributions thrown in for window dressing.

Thanks for the insight Ann. One thing you've said has me interested - "being new to the market". Is that generally a bad thing for ETFs? I ask because I have been eyeing up iShares' IJR and IJH funds, but Vanguard's upcoming VISM ETF (which is likely to be Small and Mid Cap if it's based on the equivalent whole sale fund) seems better from a diversification perspective. VISM will however be literally brand new when I plan to purchase. Is this a problem or is the Vanguard name a bit of a safety net?

Ann · 10 November 2018

Crunchy said:
Thanks for the insight Ann. One thing you've said has me interested - "being new to the market". Is that generally a bad thing for ETFs? I ask because I have been eyeing up iShares' IJR and IJH funds, but Vanguard's upcoming VISM ETF (which is likely to be Small and Mid Cap if it's based on the equivalent whole sale fund) seems better from a diversification perspective. VISM will however be literally brand new when I plan to purchase. Is this a problem or is the Vanguard name a bit of a safety net?

Crunchy, I think you are right when you say Vanguard is a bit of a safety net. My experience over the years has been newly listed stocks tend to wallow a bit until they find their footing or not. I can't see ETFs should be any different especially if they are based on a major holding of any one country stocks. I am not giving advice here but I never like to enter a holding until a few years have passed and I can track their chart. I entered one IPO waay back, made money and decided it was dumb luck and to never do it again!

aus_trader · 11 November 2018

Ann said:
It has just listed Crunchy, as I am sure you are aware. It sounds great until you really look at it. It is 57.8% US stocks and 50% of the fund's stocks are made up of 28.1% info tech and 21.4% healthcare. Their top 10 holdings are as follows...
Walt Disney Co. 2.2% Apple Inc 2.1%
Intel Corp 2.2% Unilever 2.1%
Johnson & Johnson 2.2% Costco Wholesale Corp. 2.0%
United Health Group Inc 2.1% Facebook Class A 2.0%
Roche Holdings 2.1% Visa Inc. CL A 2.0%

If the US has a bit of a retrace which is quite possible, I think this fund would be hit hard especially being so new to the exchange. It looks like just another US ETF with a potpourri of Japanese and a few small global contributions thrown in for window dressing.

Thanks for pointing out the constituents of the fund Ann. I would also monitor for now since it's just introduced to the market and may add to my portfolio down the track.

QLTY - BetaShares Global Quality Leaders ETF

Crunchy

Ann

Crunchy

Ann

aus_trader

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