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2 ASX ETFs to easily diversify your portfolio

Whilst the ASX has been a phenomenal wealth generation machine over the past 120 years, the fact remains that Australian public shares represent approximately 2% of the total shares available around the world.

So bottom line, if you only have ASX shares in your portfolio, you could probably use some diversification.

But buying international shares can be tricky. Sure, your broker, perhaps Commonwealth Bank of Australia (ASX: CBA)’s CommSec, will allow you to do so, but it’s an expensive and complicated process.

Therefore, I think the best option for most investors is to go through exchange traded funds (ETFs). ETFs are listed on the ASX, and thus provide an easy way to go overseas without going outside the ASX.

Here are two ETFs that I would recommend for easy overseas exposure.

Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE)

This ETF tracks over 5,000 companies across ‘emerging’ markets – think China, Taiwan, India, Brazil and South Africa. In my opinion, this is where a huge chunk of global growth is going to come from this century, so some exposure is a great idea for your portfolio.

Some of VGE’s top holdings include Chinese internet giants Tencent and Alibaba, as well as Taiwan Semiconductor Manufacturing Co, China Construction Bank and Naspers. This ETF charges a management fee of 0.48%

iShares Global Consumer Staples ETF (ASX: IXI)

This ETF focuses on consumer staples stock – companies that make the everyday essentials most of us can’t go without. I think the ASX is underweight in these kind of companies, and therefore some global exposure to this sector would be of great benefit to the average Aussie investor. Over half of IXI’s investments hail from the US, but it also has a significant exposure to the UK, Europe and Japan.

Some of IXI’s top holdings include Proctor & Gamble, Nestle, Walmart, Coca-Cola and Philip Morris International. This ETF charges a management fee of 0.47%

Foolish takeaway

I think these two ETFs are easy ways to get some valuable exposure to international shares. VGE is focused more on emerging markets, while IXI is heavily concentrated in the more advanced economies, so you have some nice balance there as well. I would be very comfortable holding either (or both) of these ETFs in my long-term portfolio.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of iShares Global Consumer Staples 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.