If starting an investing journey in 2026 was your new year's resolution, welcome to The Motley Fool!
Understandably, there can be plenty of information when it comes to investing in shares.
But to simplify things, one strategy is to buy ASX ETFs.
Why invest in an ASX ETF?
There are thousands of companies available to investors on the ASX.
You can invest in these companies by purchasing shares.
The goal is for the value of these shares to rise over time, as the company grows, generates more profit etc.
However it can be difficult to decide which company to invest in.
But with an ASX ETF, you can gain exposure to a basket of shares with just one trade.
So rather than picking and choosing individual stocks, an ASX ETF combines multiple – sometimes hundred of companies into one basket.
So if you want to buy shares in 100 companies, you can actually do this at once, rather than 100 individual trades.
The value of diversification
Diversifying your portfolio simply means not putting all your eggs in one basket.
Here in Australia, the 200 largest companies are called the S&P/ASX 200 Index (ASX: XJO).
Tracking this index gives us an idea of how the Australian stock market is performing relative to years past, and other countries.
For example, in 2025, this index increased by 6.26%.
So if someone had $1,000 invested in an ASX ETF that moves in line with the ASX 200, it would have risen by roughly $1,062.60.
So approximately a $62 profit.
Historically, this return in 2025 was slightly below the average performance of the ASX 200 which has returned roughly 9-10%.
An ASX ETF that has exposure to all top 200 companies is an example of diversification because it gives exposure to more than just one company.
If one company performs poorly, losses can be offset by others that perform well.
This theory can be taken even further.
For example, there are years the ASX 200 performs poorly, like in 2022, the ASX 200 lost more than 5%.
The benefit of diversification is that while the Australian market may decline, companies elsewhere can gain value over the same period.
Starting a portfolio with 2 ASX ETFs
So taking into consideration these fundamental principles, there is a strong portfolio new investors can access with just two trades.
The first ASX ETF a new investor might consider is iShares Core S&P/ASX 200 ETF (ASX: IOZ).
The fund aims to provide investors with the performance of the S&P/ASX 200.
As discussed earlier, this index is the 200 largest companies in Australia by market capitalisation.
A great compliment to this fund is the iShares MSCI World ex Australia Quality ETF (ASX:IQLT).
It is made up of almost 300 companies outside of Australia.
These are large and mid-cap developed markets companies outside Australia, chosen because of higher profitability, lower leverage, consistent earnings growth.
It includes some of the largest companies in the world like Meta Platforms (NASDAQ: META) and Apple (NASDAQ: AAPL).
These two funds can be a great starting point for a new investor, to gain access to historically well-performing companies both here in Australia and abroad.
