Why I just invested $2,500 into this exciting ASX ETF

I like to regularly buy high-quality investments that I believe will deliver good returns for my portfolio. With some of my portfolio, I want to generate passive income. That's why I decided to invest $2,500 into the ASX-listed exchange-traded fund (ETF) WCM Quality Global Growth Fund (ASX: WCMQ).

At a time when the global stock market and ASX share market are both increasingly dominated by a few large names from just one or two industries, I think an investment like the WCMQ ETF could be a useful investment for investors such as me.

Great investment strategy

If I'm going to invest with a fund manager rather than choosing something like Vanguard MSCI Index International Shares ETF (ASX: VGS), the fund manager needs to have an effective investment process that could deliver compelling returns.

WCM is a fund manager based in Laguna Beach, California, which is a very different atmosphere to being in Wall Street in New York.

WCM Investment Management's process is based on the belief that corporate culture is the biggest influence on a company's ability to grow its competitive advantage (economic moat). Having the right set-up can help a business strengthen its market position over the years.

The fund manager has a proprietary way to judge a company's corporate culture, including specific analysts who look at the corporate culture of businesses.

One of the main ways the WCM ETF team judges whether a company's economic moat is strengthening is by looking at the direction of the return on invested capital (ROIC). These are the sorts of long-term winners I want exposure to.

Since the ASX ETF's inception in August 2018, it has returned an average of 15.1% per year, outperforming the global share market (MSCI All Country World Index (ex-Australia)) by an average of more than 2% per year. Of course, past performance is not a guarantee of future returns.

Diversification

The portfolio's performance is impressive and it also offers the kind of global diversification I want more exposure to.

At the end of September, 63% of the portfolio is invested in the Americas, 15% is invested in the Asia Pacific region, 20% in Europe and 2% in 'other'. It's a globally diversified portfolio.

In terms of sector allocation, the portfolio can change as positions are bought and sold, but at the end of September 2026, four sectors had a weighting of more than 10%: IT, industrials, healthcare and financials.

Its biggest positions at the end of September were Taiwan Semiconductor, Siemens Energy, Rolls-Royce and Seagate Technology.

The portfolio normally has between 20 to 40 names in the portfolio, which I think is plenty of diversification considering I have other investments. Plus, having a more concentrated portfolio (rather than owning 100s of names) may be needed to deliver outperformance.

Passive income

While most globally-focused ASX ETFs don't have much of a dividend yield, the WCMQ ETF does because it deliberately targets a particular distribution yield.

It aims to provide investors with a minimum annualised cash distribution yield of 5% per year. As the net asset value (NAV) of the fund hopefully rises over time, thanks to the investment performance of the fund, the distribution can rise in dollar amounts.

I think a 5% yield is a nice mix of rewarding passive income, but retaining a good amount of the returns generated to grow in future years.

Overall, I think this ASX ETF has a very compelling future and I can see myself buying more in the future.

The post Why I just invested $2,500 into this exciting ASX ETF appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has positions in Wcm Quality Global Growth Fund. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Rolls-Royce Plc and Taiwan Semiconductor Manufacturing. The Motley Fool Australia has recommended Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026