The Australian share market is full of strong Australian businesses. Some of them have expanded abroad exceptionally well such as Ramsay Health Care Limited (ASX: RHC), Cochlear Limited (ASX: COH) and CSL Limited (ASX: CSL).
However, if you concentrate on just ASX businesses you aren't going to get much international diversification. I think exchange-traded funds (ETFs) are a good way to expand your investment horizon without having to learn about hundreds of other businesses.
My portfolio is very Australian-centric, which is a weakness a lot of Australian investors have, so I'm going to buy the following ETFs when there's an opportunity:
BETANASDAQ ETF UNITS (ASX: NDQ)
This fund tracks an index of the 100 biggest businesses on the NASDAQ.
Some of its largest holdings include Apple, Alphabet (Google), Amazon, Facebook and Microsoft.
Tech shares are usually expensive but these giants are some of the fastest growing blue chips in the world. Their powerful platforms and technology allow for most new revenue to fall to the bottom line.
If your portfolio doesn't have much technology exposure then this would be a good choice.
Vanguard US Total Market Shares Index ETF (ASX: VTS)
Vanguard is the famous index fund manager with incredibly low management costs. This index owns a piece of many of the listed businesses in the USA.
I prefer this index to the S&P 500 because it has many more holdings, making it more diverse. I think there's a small negative of too much capital being focused on 500 businesses (which is a fraction of the total American market).
Some of this index's top holdings include Apple, Microsoft, Amazon, Facebook, Johnson & Johnson, Berkshire Hathaway and Wells Fargo.
Vanguard All-World ex-U.S. Shares Index ETF (ASX: VEU)
This is another index run by Vanguard. Its focus is investing in businesses on share markets outside of the USA.
Asian, European, Canadian and Australian companies make up some of its largest holdings. Some of those top holdings are Nestle, Samsung, Tencent, HSBC, Unilever and Toyota.
Foolish takeaway
I think 'know-nothing' investors should go with diverse ETFs because of how effective they are with getting people invested in a broad range of companies.
For me, the above indexes are strong ideas because they give an alternative to Australian companies and diversification (of industry and geography), which is important for risk management.
