I think using ASX exchange-traded funds (ETFs) to build a stock portfolio from scratch is an easy way to begin an investing journey. Picking individual ASX companies is a noble pursuit and one that many investors admirably try their hands at. But, there's no doubt that using ETFs instead can cut down on the investing workload dramatically.
Chances are, there aren't too many readers out there who have $100,000 ready to deploy into the markets right now. But regardless, it might be a rewarding thought exercise to discuss how to quickly build a portfolio of quality ASX ETFs if one does.
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How I would build a $100,000 portfolio using just ASX ETFs today
$40,000: Vanguard Australian Shares Index ETF (ASX: VAS)
To start things off, I would deploy 40% of funds straight into an ASX index fund. ASX shares have been a great investment over any long period of time since Federation. Whilst the future is always uncertain, I see no reason why this trend won't continue for decades to come.
I've chosen the Vanguard Australian Shares ETF, as it is the only broad-based index fund on our market that offers exposure to the largest 300 shares on our market. Most other index funds offer exposure to the largest 200 shares.
As such, VAS' portfolio contains everything from BHP Group Ltd (ASX: BHP) and National Australia Bank Ltd (ASX: NAB) to Telstra Group Ltd (ASX: TLS) and JB Hi-Fi Ltd (ASX: JBH).
If the past is any indication, you can expect both decent capital growth from this ETF, as well as meaningful, franked dividend income.
$40,000: Vanguard MSCI Index International Shares ETF (ASX: VGS)
ASX shares are great and all. But I think most portfolios should also throw in some exposure to companies that are housed beyond our shores. 40% in this case.
The likes of Telstra and NAB are great businesses. But they simply pale in comparison in both size and quality to some of the Vanguard International Shares ETF's top holdings.
This fund is also an index fund, but one that tracks the stock markets of more than 20 advanced economies around the world. You'll find British, Japanese and French stocks here, as well as those from Canada, Switzerland, Hong Kong and Finland here. Saying that, the vast majority of VGS's holdings hail from the United States. If you buy this ETF, a good chunk of your money will flow into stocks like Apple, Microsoft, Amazon, NVIDIA, Coca-Cola Co and Berkshire Hathaway.
These companies are among the best in the world. As such, I think they have a rightful place in our portfolio as well. The diversification, both currency and geographic, is an added bonus.
Our final $20k: Pick your own ASX ETF
For our final $20,000, we can get a bit more exciting. I would pick a fund that, instead of offering a range of diversified businesses, aims to give exposure to one trend or market that you personally think will succeed in the future.
You might think that, with the world increasingly digitalising commerce and government services, cybersecurity shares have a bright future ahead of them. If that's the case, then considering the BetaShares Global Cybersecurity ETF (ASX: HACK) might be a good option.
Otherwise, you might be looking at the current geopolitical situation around the world and determine that defence companies are poised to thrive. If that's the case, the VanEck Global Defence ETF (ASX: DFND) might be your preferred choice.
If you're worried about a global recession, you might instead want to go for companies that thrive in all kinds of economic weather by buying the iShares Global Consumer Staples ETF (ASX: IXI).
Perhaps you're bullish on the South Korean economy and know a thing or two about that corner of the world. In that case, the iShares MSCI South Korea ETF (ASX: IKO) might pique your fancy.
There are countless options for our final $20k. I'll leave that one up to you.
