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Jan 26, 2026

Insights From ETFs: Durable, Quality, Global Infrastructure ETFs

by Michael Huynh

What Are Some of the Prominent Characteristics of Durable Quality Businesses?

The classic investment lesson from one of the greatest investors over the last fifty years, Warren Buffett, is to purchase businesses with a “moat”, meaning that investors should look for companies with durable competitive advantages that can withstand the vicissitudes of life.

Why should investors target companies with a “moat”? Because capitalism is fiercely competitive. Once someone figures out a niche that is highly profitable, sooner or later it is going to catch the attention of a lot of copycats, and without anything that can differentiate themselves, competition will eventually drive out the profitability of that niche.

However, some industries or sectors possess significant barriers to entry that are very difficult or, in some cases, nearly impossible for other companies to copy. As a result, companies with meaningful competitive advantages tend to possess highly resilient business models with durable growth and profitability.

“Moats” can come in various forms, whether tangible or intangible; however, there are four main categories that investors considering investing in a business can look for.

1.  Real Assets:

Companies that possess monopolistic hard assets that are essential to society and almost impossible to replicate, such as railroads and toll roads.

2.  Network Effect:

The investment industry usually refers to network effect as something that increases in value as more people adopt it. For example, payment networks like Visa or Mastercard (American Express has a smaller market share and targets different customers) have been dominant for decades; there are structural reasons for this. Merchants tend to only accept payment methods with lots of users, and users tend to select payment processors that are accepted by many merchants. This is what is usually referred to as a network effect, as advantages are self-reinforcing.

3.  Structural/Regulatory Advantages:

Rating agencies have been dominated by three players (Moody’s, Standard & Poor’s, Fitch) for decades. In the past, governments tried to encourage competition from new players. However, the industry dynamics remain unchanged. This is largely because when corporations issue bonds, the credit ratings issued by these three agencies can help companies save on interest expenses (which could be millions or billions for large corporations) compared to ratings issued by less well-known competitors. In addition, in order to provide ratings for issued bonds, a company must be granted the designation of a “Nationally Recognized Statistical Ratings Organization,” which requires tremendous regulatory scrutiny if a new company wants to compete in that industry.

4.  Intellectual Property (IP):

IP can come in various forms, including trademarks, copyrights, or patents that allow certain companies to be the sole manufacturer or seller of specific products, such as some life-saving pharmaceutical products.

These competitive advantages act as barriers to entry, and companies that benefit from them tend to possess significant pricing power and a low business risk profile. Overall, these are companies that are more resilient and durable, and in some cases, these businesses can continue to grow for decades, which becomes an interesting vehicle for investors to create life-changing wealth.

The strategy of owning these strong “moat” businesses in a well-diversified manner for an extended period can allow investors to compound capital more steadily with relatively low risk.

Tema Durable Quality ETF (TOLL)

The Tema Durable Quality ETF (TOLL) has an investment objective to achieve long-term growth by targeting durable quality companies with significant and enduring competitive advantages, which are characterized by tangible barriers to entry for competitors and defensive earnings streams. TOLL serves as an alternative for investors looking to diversify away from an environment where large and mega-cap technology companies dominate most portfolios.

TOLL was newly founded in May 2023, with assets under management (AUM) of $68 million. The appeal of the strategy has started to gain traction among investors, given the proven long-term success of the quality factor that the strategy pursues. TOLL has a net expense ratio of 0.55%, which is relatively low for a quality ETF, and the fund has an annual distribution yield of around 0.3%.

TOLL’s portfolio is broadly diversified, without constraints on industry, sector, or market capitalization, with a common theme of owning businesses with solid competitive advantages. TOLL currently holds 43 positions. Some of the largest positions include:

  • General Aerospace (GE), a pure high-quality aerospace company that has gone through the process of spinning off unrelated assets over the last few years, at 5.92%
  • Visa (V), one of the largest payment processors in the world (along with Mastercard), with a superior track record of strong growth and profitability, at 5.68%
  • Intuit (INTU), the parent company of well-known tax and accounting software such as QuickBooks, TurboTax, and Credit Karma
  • Performance Food Group (PFGC), a distributor of food and food-related products to individual restaurants
  • Lam Research Corp (LRCX), one of the few manufacturers of semiconductor processing equipment used in the chip fabrication process

The common theme among these holdings is that these businesses possess significant competitive advantages that have been sustainable for decades. These “moats” cannot be easily copied by competitors or new entrants, which allows them to earn attractive returns on capital and helps these companies create tremendous wealth for shareholders in a consistent, low-risk manner.

The fund was established in 2023, and the performance of TOLL since its inception has been quite impressive, with an annualized return of around 15%. We remain optimistic about the future performance of the fund given the proven success of the strategy.

Brookfield Global Infrastructure ETF (TOLZ)

The Brookfield Global Infrastructure ETF (TOLZ) provides investors with pure-play exposure to companies that operate and own infrastructure assets such as toll roads, airports, and cell towers in the global market. These assets have historically offered stable growth and predictable cash flows over time.

TOLZ was founded in 2014 and has an AUM of $174 million, which is relatively small. TOLZ has a net expense ratio of 0.46% and an annual distribution yield of around 4.0%.

TOLZ’s portfolio is broadly diversified across geographies, sectors, and market capitalizations. Some of the largest sectors include oil and gas storage and transportation (40%), electricity transmission (18.1%), and communications (9.7%). Around two-thirds of TOLZ’s holdings consist of companies domiciled in the U.S. (51%) and Canada (17%). On average, TOLZ’s portfolio companies trade at around 19x price-to-earnings, with approximately 110 holdings. Some of the larger positions include:

  • Enbridge (ENB.TO) (6.7%)
  • National Grid PLC (NG.L) (4.9%)
  • Vinci (DG.PA) (4.6%)
  • American Tower (AMT) (4.4%)
  • Williams Companies (WMB) (3.9%)

Over the last ten years, TOLZ has achieved annualized returns of around 7.5% per year on average. While the total returns may not be too impressive, TOLZ’s focus has primarily been on companies that pay consistent and growing dividend yields year after year. Though the prospective total returns of TOLZ may be modest, we think the fund is a decent choice for income-seeking investors.

Conclusion

Overall, both ETFs are solid options for investors seeking exposure to durable assets with stable cash flows and high barriers to entry. The Tema Durable Quality ETF (TOLL) may be a better choice for growth-oriented investors seeking capital appreciation and total returns, while the Brookfield Global Infrastructure ETF (TOLZ) may provide investors with more stability and predictability in terms of distribution income.