With an uncertain global economy and uncharted low-interest rate waters ahead of us, it is a good time to analyse our share portfolios through the lens of what our economy might look like in the decades ahead.
Here’s how I would build a future-orientated growth portfolio, attempting to capture some of the growth areas of tomorrow:
Vanguard Australian Shares Index ETF (ASX: VAS) – $20,000
Forming the backbone of the portfolio is this all-encompassing Aussie shares ETF (or exchange-traded fund). This is essentially a bet on our own economy, and I am happy with this (assisted by some healthy patriotic bias). Australia has some of the best banks and resource companies in the world, who helped us become one of the only advanced economies to escape the GFC without a recession. I’m very comfortable with having a fifth of our portfolio covering our local share market, and the 4.15% dividend yield that VAS offers is an added bonus!
Vanguard FTSE Asia ex-Japan Shares Index ETF (ASX: VAE) – $10,000
VAE is another ETF, but this one covers developing markets like China, Taiwan, India. These growth-engine economies will no doubt continue to play an increasingly important role in the global economy and I think that not including some emerging markets would be counter-intuitive to a future-orientated portfolio.
BetaShares Nasdaq 100 ETF (ASX: NDQ) – $20,000
My last ETF pick is NDQ from BetaShares. This ETF tracks the top 100 companies on the American NASDAQ exchange. Many of the biggest tech ‘disruptors’ like Alibaba, Tesla, Alphabet (Google), Amazon and Uber list on the NASDAQ and this ETF gives you a slice of the top 100 in one share. It would be foolish (in my opinion) not to include at least some of the big tech names in our portfolio and NDQ fills this niche very nicely.
Macquarie Group Ltd (ASX: MQG) – $20,000
Macquarie is known as our ‘fifth bank’ but has made a name for itself as a quality asset manager as well as a formidable investment company in its own right. Macquarie owns stakes in many ‘big ticket’ infrastructure projects and pays a healthy 4.43% dividend as well. In my opinion, Macquarie is a great pick for both growth and income.
CSL Limited (ASX: CSL) -$20,000
CSL is a biotech and medical research company and has made a name for itself over the past decade as one of our best-performing stocks. This is for good reason, as CSL has been at the forefront of both blood plasma and vaccine research for decades. The world is increasingly relying upon medicine as our population ages and we live longer and so I feel CSL earns a rightful place in our future-orientated portfolio.
Appen Ltd (ASX: APX) – $10,000
Appen is one of our local WAAAX tech darlings and has carved out an enviable niche for itself by becoming a leader in providing human-annotated datasets used in the development of artificial intelligence (AI) and machine learning. All of the big tech companies like Apple and Tesla are investing heavily in AI, and to help their programs like Siri understand us better, they employ the services of companies like Appen.
With these stocks, I believe that we have a solid growth portfolio ready to profit from the industries of tomorrow. A good balance between market-wide ETFs and quality growth stocks as well as Australian and international exposure gives us a nice level of diversification across the board and the ability to carve out a share of where the world is going.
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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS and Macquarie Group Limited. The Motley Fool Australia owns shares of Appen Ltd. 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.