The global share market is getting bumpy again. Some people may see volatility as a bad thing, but I think it gives us more opportunities to buy shares at discounted prices.
I think that exchange-traded funds (ETFs) are a good way for many people to invest into the share market. You can’t remove the volatility but you can improve your diversification and reduce the risks of owning individual businesses.
If you want to take a conservative approach to take advantage of global share market declines, then these two ETFs could be good ideas:
iShares S&P 500 ETF (ASX: IVV)
The US share market continues to perform strongly thanks to solid consumer spending, lower taxes for businesses and quite low interest rates.
This ETF has one of the cheapest management fees available to ASX investors at just 0.04% per annum, which leaves nearly all of the returns in the hands of investors.
The ETF is down 2% today, so we can buy a bit more of Microsoft, Facebook, Amazon, Alphabet, Apple and Berkshire Hathaway than we could yesterday. These are all high-quality businesses.
Warren Buffett regularly says that investing in a low-cost S&P 500 ETF is one of the best choices that people can make.
Vanguard All-World ex-U.S. Shares Index ETF (ASX: VEU)
If you want to invest in some cheaper global shares but you don’t want exposure to US-listed shares then this ETF could be the best choice. The US economy may go backwards a bit whoever wins the next election, whether it’s Trump or the Democratic nominee, so I can understand if you want to give US shares a miss.
So, this ETF lets you essentially invest in everything else. Every other major company that’s listed outside of the US can be found in this ETF. Canadian companies, Dutch companies, German companies, British companies and so on. LVMH, Toyota, Samsung, Nestle, Unilever, they’re all in this ETF.
Interestingly, this ETF is only down around 1.6% today, but it still means we can buy large non-US shares for a cheaper price.
The ETF comes with an annual management fee of only 0.09% per annum, making it one of the cheapest available to ASX investors.
At the current prices I’d probably go for the non-US Vanguard ETF. I have little exposure to non-US and non-ASX shares, so this would be a good way to capture that diversification in one investment.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.