We seem to be in a period of time where inflation has reduced, RBA interest rate cuts may be on the way and there are questions about the US economy. I think there could be a few ASX-listed exchange-traded funds (ETFs) that would be effective investments in this economic climate.
The reduction of Australian inflation to below 3% is a good sign for struggling households. Another interest rate cut by the RBA should help every household and business with debt.
However, the increased uncertainty with the US economy may be making some investors nervous about investing in US shares. So, I'll talk in this article about three ASX ETFs that offer different exposure than the US share market.
Vanguard Australian Shares Index ETF (ASX: VAS)
This is the most popular ASX ETF in terms of how much client money is invested in it. It provides exposure to the S&P/ASX 300 Index (ASX: XKO), which is 300 of the biggest businesses on the ASX. That's a good amount of diversification, in my view.
That includes businesses like Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Telstra Group Ltd (ASX: TLS) and Westpac Banking Corp (ASX: WBC).
Australian businesses typically have a generous dividend payout ratio, allowing them to have a pleasing dividend yield. This supports the overall dividend yield of the VAS ETF.
At the end of March 2025, the ASX ETF had a dividend yield of 3.6% (excluding the bonus of franking credits). Considering businesses can grow their dividend payments, I think that's a good starting point.
Betashares India Quality ETF (ASX: IIND)
This fund gives Aussie investors the ability to invest in 30 of the highest-quality Indian companies based on a combined ranking of high profitability, low debt levels and high earnings stability.
The Indian economy is attractive to me because of various helpful trends such as a rising population and digitalisation.
By owning the highest-quality businesses in India, I think investors give themselves the best chance of tapping into that underlying growth.
At the end of March 2025, the IIND ETF's 12-month distribution yield was 3.4%. Considering the long-term underlying earnings growth of these Indian businesses, I think that's a good starting point.
Some of the biggest holdings in the portfolio include ICICI Bank, Infosys, Kotak Mahindra Bank and Axis Bank.
Betashares FTSE 100 ETF (ASX: F100)
The UK share market could be a good place to invest for investors wanting exposure to global businesses but not from the US.
The FTSE 100 represents 100 of the largest businesses listed in the UK. Some of the businesses in the portfolio include Astrazeneca, Shell, HSBC and Unilever.
According to BetaShares, the F100 ETF has a 12-month distribution yield of 3%. That's a decent starting dividend yield, in my view.
Impressively, in the five years to March 2025, this fund has delivered an average return of 12.5% per year.
