I think a lot of regular investors could do with focusing on exchange-traded funds (ETFs) for a majority of their investing.
ETFs allow us to buy a large group of shares with a single investment costing only one fee of brokerage.
However, you shouldn’t buy any old ETF. There are some bad ETFs just like there are some bad businesses. Here are two ETFs that could suit most portfolios:
Vanguard FTSE Asia Ex Japan Shares Index ETF (ASX: VAE)
There is no doubt that Asia is the fastest-growing region in the world in economic terms. Therefore the businesses listed in China, India, South Korea, Singapore, Taiwan and Hong Kong could be worth watching and owning.
With this ETF you get exposure to nearly 900 business holdings including big names like Tencent, Alibaba, Baidu and Samsung.
It has a relatively cheap annual management fee of 0.40% per annum and over the past three years has created an average return per annum of 14.85%, including all of the recent negativity surrounding the trade war.
With a dividend yield of 2.5% and a price/earnings rate of 13.5x it’s not terrible for income or value. I’d be happy to make it 5% or 10% of my portfolio.
Betashares Global Cybersecurity ETF (ASX: HACK)
Another undeniable trend is the fact that cybersecurity is going to be increasingly important for businesses, governments and individuals.
This ETF from Betashares has an annual management fee of 0.67%, which isn’t terrible considering the ETF has returned an average of 21.1% per annum since inception in August 2016.
It largest holdings include shares like Cisco, Raytheon, Fortinet, Palo Alto Networks and Splunk.
This is a fairly specialised ETF, so I wouldn’t want a lot of my portfolio allocated to this one idea, but it’s a theme that could do well over the coming years.
At the current valuations I would rather invest in the Vanguard Asian ETF for its cheaper price and wider diversification.
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Motley Fool contributor Tristan Harrison owns shares of VANGUARD FTSE ASIA EX JAPAN SHARES INDEX ETF. 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.