Although we love our franked dividends on the ASX, there’s no doubt that with 98% of global shares being available outside our shores, some healthy international diversification would do a lot of Aussie investors some good. Exchange traded funds (or ETFs) are a great and easy way to achieve this – you can get exposure to entire markets in one easy ASX share.
Here are two ASX ETFs that offer just that.
Betashares NASDAQ 100 ETF (ASX: NDQ)
The Nasdaq is one of the stock exchanges over in the United States (US) and it’s the one that elicits the most excitement these days. All the big tech names like Intel, Uber and Alphabet (Google) list on the Nasdaq and any tech start-up who wants to IPO generally goes with this option.
This ETF from Betashares gives you exposure to the top 100 companies on the Nasdaq and is weighted to company size. Its current hop holdings include Microsoft at 11.1%, Amazon at 10.4%, Apple at 9.9% and Facebook at 5.2%. So, evidently, you’re getting big exposure to the US tech giants here as well as a lot of other quality companies, all in one ticker.
NDQ charges a management fee of 0.48%, which is quite reasonable in my opinion, and also pays a distribution yield of 0.5%.
Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE)
This ETF from Vanguard is a little more broad than NDQ, covering 4,743 companies from 42 countries across the ‘emerging markets’ world – including China, Taiwan, India, Brazil, Russia, Chile and Egypt. Emerging markets (by definition) can offer extremely lucrative growth opportunities and often move out of tandem with the developed markets like the US, the United Kingdom (UK) and Australia, making VGE a great portfolio diversifier and hedge against other stock markets (including our own).
VGE is weighted 34.4% to China and 13.4% to Taiwan, with the other holdings making up the remainder. This ETF’s current top holdings include Chinese tech giants Tencent and Alibaba as well as Taiwan Semiconductor Manufacturing Co. VGE pays out a distribution yield of 2.74% and charges a management fee of 0.48% (coincidentally matching NDQ).
Both of these ETFs offer a broad array of quality companies that can give a portfolio some easy diversification across some growth areas that simply aren’t available on the ASX, while charging a very reasonable fee to do so (both ETFs will cost you $48 for every $10,000 invested annually). I would be very happy having either or both of these ETFs in my long-term portfolio.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Sebastian Bowen owns shares of Facebook. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Facebook. 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.