3 ETFs for a strong portfolio

Exchange-traded funds (ETFs) seem to be all the rage these days. It’s easy to see why – most ETFs have low costs and offer investors good diversification.

There are many different ETFs out there, some focus on indexes whilst others offer a slight twist on the index theme. One of the most widely-held Australian ETFs is the Vanguard Australian Share ETF (ASX: VAS) which offers a very easy way for people to invest into the Australian share market.

However, the index is weighted towards businesses that dominate industries and don’t have much room for growth.

Therefore, it might be better to invest in the BetaShares Australian Ex-20 Portfolio Diversifier ETF (ASX: EX20).

This ETF gives the investor exposure to Australian shares ranked from 21 to 200 based on their market capitalisation. These shares are much more likely to be growing at a good pace and not be so heavily focused on the finance sector. Some of its top holdings include Amcor Limited (ASX: AMC), Origin Energy Ltd (ASX: ORG) and Sydney Airport Holdings Ltd (ASX: SYD).

However, even this ETF may not be what investors want. Perhaps the American share market is where you want to be. Another good option could be Vanguard US Total Market Shares Index ETF (ASX: VTS). It offers exposure to the biggest companies in the world like Apple, Facebook, Alphabet (Google), Amazon and Berkshire Hathaway. The American share market has been a much better place to be invested than Australia over the past decade.

Investors may want to invest in an idea, perhaps a theme could beat the overall market. One idea is Betashares Global Cybersecurity ETF (ASX: HACK), this gives investors exposure to some of the world’s biggest cybersecurity companies. Cybersecurity is becoming increasingly important, governments and businesses are likely to increase spending to ensure customer details and intellectual property remain secret.

Foolish takeaway

I’m a fan of all three of these ETFs, BetaShares offer a number of other interesting options. At the current prices I’d definitely go for the cybersecurity index because I believe the other two are too highly priced, whereas cybersecurity companies could keep generating good underlying growth.

Want more diversification ideas? These top shares should provide strong returns over the next few years.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited. The Motley Fool Australia owns shares of BETA CYBER ETF UNITS. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.