Investing in exchange-traded funds (ETFs) is one of the best vehicles you can use to create wealth on the share market, outside purchasing individual shares. Firstly, ETFs require almost no effort on your part. Secondly, you can use them to get easy exposure to literally thousands of different companies in one easy trade. This includes companies that might be otherwise unavailable individually to the typical ASX investor.
So with that said, here's how I would build a $100,000 ETF-based ASX portfolio for diversification and easy returns.
Vanguard Australian Shares Index ETF (ASX: VAS) – $30,000
VAS is the most popular ASX ETF for good reason. It covers the largest 300 companies in Australia, which captures more of the small-cap market that other S&P/ASX 200 Index (ASX: XJO) funds.
With VAS, you are getting most Aussie public companies you can think of. This includes everything from Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW) to JB Hi-Fi Limited (ASX: JBH), Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO). All wrapped up in one investment, I like to think of VAS as a 'slice of Australia'.
VAS charges a fee of 0.1% per annum.
iShares Global 100 ETF (ASX: IOO) – $30,000
This ASX ETF is a little different from VAS in that invests in the largest 100 companies across the advanced economies of the world. Thus, you are getting exposure to American giants like Apple, Alphabet and McDonalds, as well as British companies like BP and Diageo and Japanese companies like Toyota and Panasonic.
These companies have enjoyed enormous success through their powerful brands, global reach and universality of their products. Hence, I think this ETF is a great asset to have in a well-balanced and diversified portfolio.
IOO charges a management fee of 0.4%
iShares Global Consumer Staples ETF (ASX: IXI) – $30,000
Many investors consider consumer staples shares to be boring. That's because they represent companies that make the everyday essentials we all rely on. This includes canned food, personal hygiene products, drinks and cleaning materials.
It's true that these products may not garner the same excitement as the latest tech innovations. Even so, I believe the panic buying we experienced at the beginning of the COVID-19 crisis helps reinforce the overall worth of these types of companies. Thus, I feel this ETF makes a strong addition to an ASX ETF portfolio. Some of this ETF's top holdings include Procter & Gamble, Nestle, The Clorox Company, Philip Morris International and Kimberly-Clark.
IXI has a management fee of 0.47%.
BetaShares Asia Technology Tigers ETF (ASX: ASIA) – $10,000
ASIA is a fund that tracks the largest companies across Asia, with a focus on those companies that are tech heavyweights. Countries like Taiwan, South Korea, India and Hong Kong are covered, but the fund is dominated by Chinese tech giants like Tencent, Alibaba, Baidu and JD.com.
Even though these markets carry a little more risk, I still think the growth opportunities they offer can't be ignored in the 21st century. Therefore, ASIA has a place in our $100,000 portfolio.
ASIA has a management fee of 0.67%
