Last weekend, I discussed the only Australian shares in my ASX stock portfolio as we embark on investing in 2025. Today, I'm going to expand on that by discussing the only ASX exchange-traded funds (ETFs) that I own at the start of this year.
As I went through last weekend, although ASX shares and ETFs were my first and, for a long time, only investments, my portfolio now contains more US shares and ETFs than ASX ones.
But even so, there are several ASX ETFs that I currently own now.
The index funds
First and foremost amongst these is the Vanguard Australian Shares Index ETF (ASX: VAS).
VAS is the quintessential ASX index fund. It represents an investment in the largest 300 Australian shares listed on the ASX. That's everything from BHP Group Ltd (ASX: BHP) and National Australia Bank Ltd (ASX: NAB) to Ampol Ltd (ASX: ALD) and Aussie Broadband Ltd (ASX: ABB).
I like VAS for its simple and cheap exposure to the Australian stock market. I'm happy to pay VAS' management fee of 0.08% per annum for this access. Given its decent long-term historical return of 9.15% per annum (as of 31 December) and the hefty dividends this ETF habitually pays out, I am happy to hold this position for the long term, just in case my individual share choices don't end up being market-beaters.
In addition to VAS, I also own the Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO). This ASX ETF complements the Vanguard Australian Shares ETF with its portfolio of around 180 smaller companies on the ASX. Instead of BHP and NAB, VSO's largest holdings are stocks like JB Hi-Fi Ltd (ASX: JBH) and Bendigo and Adelaide Bank Ltd (ASX: BEN).
I think this ETF nicely balances out VAS. Together, these two funds offer a more well-rounded exposure to the Australian markets than either one individually.
The other index fund in my portfolio is the BetaShares Nasdaq 100 Currency Hedged ETF (ASX: HNDQ).
This ETF covers the largest 100 non-financial shares listed on the tech-heavy NASDAQ-100 (INDEXNASDAQ: NDX) Index. It's a great way to easily add exposure to American tech giants like Apple, Amazon, Tesla and NVIDIA, as well as other tech heavyweights like Airbnb, Netflix, PayPal and Texas Instruments.
Other ASX ETFs
There are another two ASX ETFs in my portfolio that are worth mentioning. Neither are the broad-based market index funds that we see above.
Firstly, there's the iShares Global Consumer Staples ETF (ASX: IXI). I love consumer staples shares for their defensive nature and ability to ring in profits during all kinds of economic weather. The ASX doesn't have too many global consumer staples companies, so this ETF is a great way to get exposure to the likes of Walmart, Costco, Unilever, Procter & Gamble, Colgate-Palmolive and Coca-Cola.
I like the defensiveness and stability that this ETF adds to my portfolio.
Secondly, there's the VanEck Morningstar Wide Moat ETF (ASX: MOAT). This is a peculiar ETF in that it holds an actively managed portfolio of US shares selected based on business characteristics. In this case, those characteristics are the perceived possession of a wide economic moat.
This Warren Buffett term refers to a company's inbuilt competitive advantage over its competition. Buffett himself has said he likes to look for it in a new investment.
MOAT has been an exceptional performer in my portfolio for a number of years. Since this ETF's inception in 2015, it has managed an average performance of 16.16% per annum (as of 31 December). As long as this ASX ETF is bringing home those kinds of returns, it has a place in my investing house.
