Exchange-traded funds (ETFs) can be a great tool to use to diversify your portfolio of ASX shares. Whilst there are many ETFs available on the ASX, here are two ETFs to consider today that can add diversification to your portfolio whilst charging relatively low management fees.
iShares S&P 500 ETF (ASX: IVV)
This ETF from iShares charges one of the lowest management fees of any ASX ETF. It will set you back just 0.04% per annum for your position. That equates to $4 a year for every $10,000 invested. The S&P 500 Index (INDEXSP: .INX), which is the index this ETF tracks, holds 500 of the largest companies over in the United States.
The US is home to many of the best companies in the world. And I'm sure most investors would be happy with its top holdings. These include Apple Inc (NASDAQ: AAPL), Microsoft Corp (NASDAQ: MSFT), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) and Amazon.com Inc (NASDAQ: AMZN). As well as older, blue chip companies like Coca-Cola Co (NYSE: KO), Johnson & Johnson (NYSE: JNJ) and Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B).
As you can probably gather, tech companies form a large block of this ETF. But that could work out to be an advantage for an ASX investor, seeing as tech companies are dwarfed by miners and banks in our own S&P/ASX 200 Index (ASX: XJO).
This ETF also offers a very solid long-term performance track record. It has returned an average of 16.41% per annum for the past 10 years.
iShares Global Consumer Staples ETF (ASX: IXI)
This ETF runs on a slightly different track. It also holds a global portfolio of companies that all dwell in the consumer staples industry. Consumer staples can be loosely defined as any goods or services we can't live without. Think foods, drinks and household essentials, as well as vices like alcohol and tobacco. These kinds of companies can be useful in a portfolio, seeing as demand for their products is not usually affected by adverse economic conditions or changing technology.
Its largest holdings include companies like Coca Cola, PepsiCo Inc (NASDAQ: PEP), Nestle, L'Oreal, Procter & Gamble Co (NYSE: PG) and Colgate-Palmolive Company (NYSE: CL). But there's a couple of ASX companies in there too. These include Coles Group Ltd (ASX: COL) and Treasury Wine Estates Ltd (ASX: TWE).
54% of the Global Consumer Staples ETFs' holdings are US companies. But it also has significant exposure to the United Kingdom, Switzerland, France and Japan. It charges a management fee of 0.46% per annum, and has returned an average of 11.2% per annum over the past 10 years.
