$100,000, 4 Asx Etfs: The Exact Split I'd Use, And The Etf I'd Leave Out

I think there are two key elements that help Australians get ahead: saving money and investing. It's as simple as that. ASX-listed exchange-traded funds (ETFs) can be some of the best investments to own with how simple they are.

It's very effective that, in one transaction, we can buy a whole portfolio of shares. We don't have to go out and buy 200 individual stocks to get that same level of diversification.

There are various strategies that Australians can buy. Some focus on ASX shares, some aim for specific international regions (such as Europe or Asia), some invest in the entire global stock market, and some focus on specific industries.

One of the most popular ASX ETFs is the Vanguard Australian Shares Index ETF (ASX: VAS). I can see why it's popular – it has low management fees, gives easy exposure to 300 of the largest ASX shares, and comes with a decent dividend yield.

However, I'm not confident that the earnings of the biggest stocks like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), or Westpac Banking Corp (ASX: WBC) are going to compound at more than 10% per year over the rest of the decade.

The major ASX bank shares and ASX miners are already huge businesses in their sectors, and it's hard to grow quickly when the business is already so big.

Iron ore earnings could be challenged because of increasing supply of iron ore from Africa (namely the Simandou project), which looks to me like a headwind for the iron ore price.

For banks, credit growth could be slow amid high interest rates and taxation changes affecting properties.

All of the above is why I'm buying specific ASX shares for my exposure to the Australian economy, and why I'd happily buy the following ASX ETFs with $100,000 for foreign exposure.

VanEck MSCI International Quality ETF (ASX: QUAL)

If I were only going to highlight one fund from this article, it'd be the QUAL ETF. This fund aims to own 300 of the highest-quality businesses in the world. Over time, I believe high-quality companies are more likely to perform than an 'average' global business.

There are a wide array of opportunities on the global share market, so this fund utilises a systematic approach to identify great businesses and focus on owning those.

To pick high-quality businesses, the QUAL ETF looks at three factors.

First, it wants to see a high return on equity (ROE). ROE measures how much profit a business makes compared to how much shareholder money is retained in the company. The higher the ROE number, the higher quality it seems (on paper). Plus, that could suggest the level of return that additional retained earnings could generate for the company.

Second, the QUAL ETF wants to see earnings stability from its holdings. I think there are two great benefits to that. Firstly, if earnings aren't falling, then it means they're regularly going up – that's a great tailwind for share price appreciation over the long term. Secondly, during times of widespread economic distress, resilient profits could mean smaller share price declines because investors would be less concerned about that sort of business' earnings than a business that's very exposed to weaker economic conditions.

Third, the businesses should have low financial leverage. Healthy debt levels are good because it means interest costs are lower (particularly during periods of higher rates, such as right now), and those businesses also have the financial flexibility to afford useful acquisitions.

The QUAL ETF offers good diversification across both sector and geographic markets.

At 31 October 2026, there were six sectors with a weighting of more than 8%: IT, healthcare, industrials, financials, communication services, and consumer staples. Country weightings of at least 0.5% at 31 October 2026 included: the US, Switzerland, the UK, Japan, the Netherlands, Germany, France, Canada, Denmark, Sweden, and Ireland.

Currently, its biggest stock positions include Microsoft, Apple, Meta Platforms, and Eli Lilly.

I'd allocate $40,000 of my theoretical $100,000 to this fund.

Global X S&P World Ex Australia GARP ETF (ASX: GARP)

The second fund I want to highlight is one that employs a 'growth at a reasonable price' (GARP) strategy with the global share market.

Earnings growth is usually what justifies a sustainable increase in a share price. When we look at some of the best performers on the ASX or the global stock market over the last 15 years, such as Pro Medicus Ltd (ASX: PME) or Nvidia, they have delivered significant growth with their financials to sustain higher share prices.

The GARP ETF looks to target businesses with good growth of both revenue and earnings.

But the 'ARP' (at a reasonable price) is also important to the strategy. The fund will only buy growing businesses with a price-earnings (P/E) ratio that makes sense.

As a third measure to ensure it only chooses strong investments, it also has a quality check by looking at the financial leverage and ROE of the businesses.

It owns 250 stocks that it views pass all of the above criteria, which is solid diversification. There are currently six sectors with a weighting above 10%, and 14 countries with a weighting of more than 1%, so it looks diversified to me.

I'd allocate $35,000 of my theoretical $100,000 to this fund.

VanEck Morningstar Wide Moat AUD ETF (ASX: MOAT)

The third ASX ETF I want to highlight is a fund focused on high-quality US businesses with enduring economic moats.

The biggest American companies get most of the attention, but there are plenty of great companies smaller than that mega-cap group.

An economic moat represents the competitive advantages that allow a business to stay ahead of its peers. An economic moat can come in a variety of forms such as cost advantages, network effects, intellectual property, and so on.

The MOAT ETF wants to own businesses which have economic moats that analysts believe will almost certainly endure for the next decade and, more likely than not, endure for two decades.

Additionally, the fund only invests in these competitively advantaged companies when they're attractively priced to what Morningstar analysts think they're worth.

Some of its biggest holdings include Tyler Technologies, GE Healthcare Technologies, and Broadridge Financial Solutions.

I'd allocate $15,000 of my theoretical $100,000 to this fund.

VanEck MSCI International Small Cos Quality ETF (ASX: QSML)

The final fund I want to highlight is the QMSL ETF, which is focused on high-quality smaller businesses.

I think smaller companies have more earnings growth ahead of them than mature blue chips. Every large business was a small one at some point.

The QSML ETF owns 150 relatively small international growth stocks.

Just like the QUAL ETF, it looks for three metrics – a high ROE, earnings stability, and low financial leverage, so I won't repeat the same explanations of what they are. Those characteristics offer the same benefits for larger businesses as they do for smaller ones

It has been a tough period for small caps during inflation and higher interest rates, but I think this represents a good time to invest for when conditions start improving.

Currently, its three biggest holdings, as examples, are Royal Gold, Exelixis and Manhattan Associates

I'd allocate the final $10,000 to this ASX ETF.

Overall, I think these funds are all capable of outperforming the S&P/ASX 300 Index (ASX: XKO) over the long term, and this split of funds offers better diversification, in my view, than the increasing focus on US tech and AI-related businesses in global benchmarks.

The post $100,000, 4 ASX ETFs: The exact split I'd use, and the ETF I'd leave out appeared first on The Motley Fool Australia.

More reading

• 5 ASX ETFs for smart investors in November
• 2 top ASX shares to buy and hold for the next decade
• How much do I need to retire on $80,000 a year at 55?
• 3 ASX ETFs paying a dividend yield of 6% or more
• Already own ASX 200 and S&P 500 ETFs? Here are 3 I'd buy next

Motley Fool contributor Tristan Harrison has positions in Pro Medicus, VanEck Morningstar Wide Moat ETF, and VanEck Msci International Quality ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Apple, Broadridge Financial Solutions, Eli Lilly, Exelixis, GE HealthCare Technologies, Manhattan Associates, Meta Platforms, Microsoft, Nvidia, and Tyler Technologies. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has recommended Apple, BHP Group, Meta Platforms, Microsoft, Nvidia, Pro Medicus, and VanEck Morningstar Wide Moat ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.