The US share market has been sent into a spin by US President Trump's decision to apply tariffs on most goods from most countries. That has sent unit prices of some US exchange-traded funds (ETFs) down noticeably. For concerned investors, it could be wise to diversify their portfolios by adding ASX-listed ETFs focused on different markets.
When investors buy iShares S&P 500 ETF (ASX: IVV) or Vanguard US Total Market Shares Index ETF (ASX: VTS), they're buying a number of great businesses, including the big US tech companies. I think those funds are good investments. However, I wouldn't suggest investors have all their portfolio invested in one of those funds.
The recent uncertainty arising from the US shows the value of having diversification. The global share market is more than just the US stocks.
For investors wanting to add geographic exposure to their portfolios, the following three funds below could be compelling ideas.
Vanguard All-World ex-US Shares Index ETF (ASX: VEU)
The first is Vanguard All-World ex-US Shares Index ETF. This ETF is one of the easiest ways to get exposure to the global share market outside of US stocks.
It's invested in businesses from across the world, including places like Japan, the UK, China, Canada, France, Switzerland, Germany, India, Taiwan, Australia, the Netherlands, South Korea, Sweden, Italy, Spain, Denmark, Hong Kong, Saudi Arabia and Brazil.
The VEU ETF is very diversified, with more than 3,800 holdings. In my view, it adds a lot of what investors may be looking for with diversification away from US-focused ETFs.
It has an annual management fee of just 0.04%, so it's very low cost.
Betashares FTSE 100 ETF (ASX: F100)
For investors who want a more specific geographic allocation, I think this is one of the more appealing ones to consider.
The F100 ETF is invested in 100 of the biggest businesses listed in London, plenty of them have global earnings – this fund is not a pure bet on the UK economy. I believe 100 holdings is a solid amount of diversification.
Trump hit Europe with a higher tariff rate (20%) than the UK (10%). This may suggest that UK companies could be better placed to continue generating solid earnings in the coming years under the Trump administration.
Betashares India Quality ETF (ASX: IIND)
I don't know how the global share market or global manufacturing base will adjust in the foreseeable future, but I think India's economy is well-placed to continue growing regardless of what happens.
The IIND ETF invests in 30 of the highest-quality Indian companies based on their combined ranking across high profitability, low leverage and high earnings stability.
BetaShares says India's economy is one of the fastest-growing in the world, with future growth potential underpinned by "strong structural fundamentals". It's benefiting from tailwinds like a rising population, digitalisation of its economy and a growing middle class.
I think this could be an interesting ASX ETF to own in the coming years.
