How to successfully invest using only ASX ETFs: expert

Here are five ETFs this expert recommends.

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Key points

  • ASX exchange-traded funds keep growing in popularity 
  • But with so many to choose from, where does one start? 
  • Let's see which five ETFs this expert recommends... 

Exchange-traded funds (ETFs) are increasingly popular as a method of investing in shares and other assets on the ASX. The rise of the ETF over the past decade or two has been a well-documented trend, including here on the Fool.

But there are so many ETFs out there these days, covering almost anything one can think of, that it can be difficult to know which ones are the best to have one's money in.

Between index funds, commodity funds and sector-specific ETFs, it can quickly become overwhelming to sift through the cornucopia of ETFs available on the ASX.

So today, let's look at just five ETFs that one exchange-traded fund expert reckons are all you need to successfully invest.

Expert names the only five ASX ETFs you need

When it comes to ASX ETFs, one of the leading experts on the matter is Chris Brycki. Brycki is the founder and CEO of investment company Stockspot. Stockspot builds an investment portfolio for its clients using only ETFs. He recently sat down with Livewire for an interview.

Brycki starts off by naming the five ETFs that he likes to use to build his investors' portfolios.

The first is none other than the Vanguard Australian Shares Index ETF (ASX: VAS). VAS is the most popular ETF on the ASX by funds under management. It is also the only ASX index ETF that tracks the S&P/ASX 300 Index (ASX: XKO), rather than the more popular S&P/ASX 200 Index (ASX: XJO).

This is one of the reasons why Brycki likes this ETF for exposure to Australian shares, also pointing to its low fees, greater liquidity and long-term returns.

But when it comes to international shares, Brycki is happier to go against popular opinion. Currently, the two most popular ASX-listed international shares ETFs are the iShares S&P 500 ETF (ASX: IVV), and the Vanguard MSCI International Shares Index ETF (ASX: VGS). But neither of these funds are Brycki's preferred avenue to international shares.

Instead, Stockspot favours the iShares Global 100 ETF (ASX: IOO). This fund holds only 100 of the world's largest companies. These hail from the US, as well as Europe, Japan, Korea and the United Kingdom. Stockspot uses IOO for its liquidity and longer-listed track record. Not to mention its habit of outperforming its rivals.

Diversifying with exchange-traded funds…

For access to emerging markets, the iShares MSCI Emerging Markets ETF (ASX: IEM) is Stockspot's fund of choice. This ETF holds more than 800 companies from emerging countries like China, India and Taiwan. IEM is also preferred by Stockspot for both its liquidity and long pattern of generating returns. That's despite some of its rivals offering lower fees.

Turning to assets outside the sharemarket now, and we have Brycki's preference for accessing fixed interest bond investments. The iShares Core Composite Bond ETF (ASX: IAF) holds bonds issued by Australian governments. As well as some investment-grade corporate bonds.

Stockspot chooses this bond for fixed-interest asset exposure for "its size, liquidity, track record, high credit quality and relatively short duration". Not to mention its lower fees compared to its rivals.

Stockspot's final ETF covers a different asset class again. And this time, it's gold. For this precious metal, Brycki's choice is the ETFS Physical Gold ETF (ASX: GOLD).

This ETF is backed by physical gold bullion, stored in a vault in London. Stockspot also likes the fact that it is unhedged. This means investors can benefit from a falling Australian dollar. Stockspot also appreciates GOLD's size, as well as the fact that it has the tightest spreads in buying and selling units.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Vanguard MSCI Index International Shares ETF. The Motley Fool Australia has recommended Vanguard MSCI Index International Shares ETF and iShares Trust - iShares Core S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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