If you are not a fan of stock-picking, then don't worry.
That's because exchange traded funds (ETFs) are here to save the day by allowing you to purchase large groups of shares with a single click of the button.
And to narrow things down for you, the team at Bell Potter has picked out two Australian ETFs that it thinks would be great picks for investors looking for domestic share market coverage.
Let's see which funds it is recommending to clients:
Image source: Getty Images
Vanguard Australian Shares Index ETF (ASX: VAS)
The first Australian ETF for investors to consider is the Vanguard Australian Shares Index ETF.
This popular fund offers exposure to the ASX 300 index, which is home to 300 of the largest and most liquid shares on the Australian share market.
This means that you would be buying a slice of giants like BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA), as well as smaller names like Universal Store Holdings Ltd (ASX: UNI) and Tyro Payments Ltd (ASX: TYR).
The beauty of this is that you get a good representation of the Australian share market and its dividend culture. For example, at the last count, it was trading with a dividend yield of 3.1%. That's better than some savings accounts these days.
Commenting on why it thinks this ASX ETF is one of the best to buy, Bell Potter said:
We like VAS as a method of gaining broad market exposure to the ASX. Vanguard is a best-in-class ETF issuer in our view, ensuring optimal portfolio replication, high liquidity and reputable corporate action management.
Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO)
Another Australian ETF that the broker is positive on is the Vanguard MSCI Australian Small Companies Index ETF.
As you might have guessed from its name, this fund targets the smaller end of the share market.
Bell Potter highlights that the ETF is invested in a portfolio of Australian small cap companies, which creates an efficient mechanism to capture their long term performance. It points out that the index it tracks captures the smallest 14% of the Australian equity universe by free float market capitalisation.
Given how some analysts believe that small caps are set for a strong period as interest rates rise, it could be a good time to consider this fund. Bell Potter concludes:
VSO provides a simple, low-cost method to develop an allocation to small and mid cap equities. [..] Smaller companies typically have greater growth potential than large caps given they are often in an earlier stage of their growth cycle. Growth in these companies can enhance overall portfolio returns.
