Exchange-traded funds (ETFs) could be the way to go for most investors.
A lot of ETFs are based on an index of shares in some way. Warren Buffett has regularly said that regular “know-nothing” investors should stick to index funds like the S&P 500 which we can invest in through iShares S&P 500 ETF (ASX: IVV).
Vanguard is a world leader in offering low-cost ETFs and investors could do well by simply investing in just one ETF like Vanguard US Total Market Shares Index ETF (ASX: VTS) or Vanguard MSCI Index International Shares ETF (ASX: VGS).
However, there some ETFs out there I’m interested in for my own portfolio that can work well with a portfolio of individual growth shares or dividend shares. If I had $50,000 to invest in ETFs, I’d choose these:
BetaShares NASDAQ 100 ETF (ASX: NDQ) – $20,000
There are few blue chips out there with more exciting prospects than the FAANG shares. Amazon, Netflix, Alphabet and Facebook have all declined in value fairly significantly over the past few months. Apple in-particular has been hurt in recent days on worries surrounding its revenue guidance. Each FAANG share has several compelling reasons for an investment such as Apple’s cloud businesses, Alphabet’s Waymo, Facebook’s Instagram & Whatsapp and so on.
Microsoft, Intel and others are also constituents of this exciting tech ETF and I believe over a decade-long period this group will outperform the ASX and most other broad index investments.
BetaShares Asia Technology Tigers ETF (ASX: ASIA) – $10,000
The same types of things can be said about the Asian equivalents of the FAANG shares.
This Asia Technology ETF of eCommerce, AI, consumer electronics, social media and gaming businesses includes shares like Tencent, Alibaba, Baidu, Samsung and Xiaomi.
Before the trade war between the US and China, things were looking very rosy for this ETF. I’m sure things will be solved eventually, perhaps this year, between the superpowers, which will likely restore sentiment about the underlying businesses. Their earnings will probably keep going up at a good pace either way.
Vanguard FTSE Asia Ex Japan Shares Index ETF (ASX: VAE) – $20,000
A better way to play the Asian recovery could be to choose this Vanguard Asia ETF which is invested in around 850 shares, so it’s much more diversified. This ETF is invested in the Asian tech shares but it’s also invested in banks, insurance, telcos and so on.
There is a growing Asian middle class that is increasing by number and wealth. Over time the businesses will greatly benefit from this as well, which should mean more spending on all the various services that is second nature to us such as travel businesses and consumer goods.
Assuming China doesn’t go into recession and continues to open up its economy to foreign investors then the two Asian ETFs could turn out to be very good investments over the next decade or two.
However, I can understand if you’re not sold on the idea of investing in Asian shares just yet.
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Motley Fool contributor Tristan Harrison owns shares of BetaShares Asia Technology Tigers ETF. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia owns shares of BetaShares Asia Technology Tigers ETF. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF. 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.