Exchange-traded funds (ETFs) can be a good way to find diversification.
Some ETFs give exposure to hundreds or even thousands of businesses. While others might have less than 50 positions.
These two ETFs could be ones to think about:
Vanguard Msci Index International Shares ETF (ASX: VGS)
This ETF is about investing in the global share market with businesses that are listed across the world in economically developed countries.
It’s invested in over 1,500 businesses. The portfolio is predominantly invested in US businesses such as Apple, Microsoft, Amazon.com, Alphabet, Facebook, Tesla, JPMorgan Chase, Johnson & Johnson, Visa, UnitedHealth, Berkshire Hathaway, Nvidia and Home Depot.
But there are portfolio positions that are listed in other countries like Nestlé, ASML, Roche, LVMH, Novartis, Toyota, SAP, Softbank and AstraZeneca.
It’s invested in plenty of countries other than the US like Japan, the UK, France, Canada, Germany and Switzerland.
The biggest sector allocation is around 22% of the portfolio to information technology. Other sectors in the portfolio with a double digit allocation include financials, healthcare, consumer discretionary and industrials.
Vanguard Msci Index International Shares ETF has an annual management fee of 0.18%, which is one of the lowest fees in the global ETF market.
The returns of the ETF have been double digit over the long-term. Since inception in November 2014 it has produced net returns of 13% per annum. However, past performance is not an indicator of future performance.
Betashares Global Cybersecurity ETF (ASX: HACK)
This ETF has a much more focused portfolio than the Vanguard one. It has a total of 40 positions in the portfolio.
Its biggest holdings are: Cisco Systems, Accenture, Crowdstrike, Zscaler, Splunk, Proofpoint, Fortinet, Akamai Technologies, Juniper Networks and Leidos.
These businesses are global leaders and emerging players in the cybersecurity space. Cybercrime is on the rise in a world where more important information and data is held online.
More than half of the portfolio is invested in businesses that focus on systems software, but other sectors include IT consulting, communications equipment, internet services and infrastructure, application software and so on.
It has an annual management fee of 0.67%. Betashares Global Cybersecurity ETF has grown its net assets to approximately $492 million.
The large majority of this ETF’s portfolio is invested in US shares, with a weighting of around 90%. The only other countries with a weighting of more than 1% are: Israel (3.4%), the UK (3.1%), Japan (1.4%) and France (1.4%).
Past performance is not an indictor of future performance, but Betashares Global Cybersecurity ETF has produced an average return per annum of 19.3% since inception in August 2016.