If you're new to investing, and to be honest even if you're not, exchange traded funds (ETFs) are an excellent way to invest the way you want to, without the risk and effort involved in picking individual stocks.
ETFs invest in many ways: by theme, commodity, sector, and across entire share market indices.
There are literally hundreds of ETFs on offer, but for a start, let's look at four which provide broad diversification rather than focusing in on any one theme.
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Betashares Diversified All Growth ETF (ASX: DHHF)
As the name suggests, this ETF is aiming for high growth, which, as Betashares say on their website, "may suit investors with a high tolerance for risk''.
While other ETFs might focus in on one share index, DHHF casts its net broadly.
As Betashares says:
The Fund is invested in a blend of large, mid and small cap equities from Australia, global developed and emerging markets, offering investors exposure to an 'all-cap, all-world' share portfolio with the potential for high growth over the long term. The ETF provides exposure to approximately 8,000 equity securities listed on over 60 global exchanges, in one ASX trade.
DHHF ETF is invested 37% in Australian equities and 63% international.
It has delivered a return of 12.9% over the past year and 10.69% per year over five years.
Betashares Wealth Builder Diversified All Growth Geared (30-40% LVR) Complex ETF (ASX: GHHF)
This ETF invests across Australian and global equities, but does so using gearing to deliver hopefully stronger returns.
The fund's gearing ratio, "being the total amount borrowed expressed as a percentage of the total assets of the fund", generally varies between 30% and 40%.
Betashares adds:
Gearing magnifies gains and losses and may not be a suitable strategy for all investors. Investors in geared strategies should be willing to accept higher levels of investment volatility and potentially large moves (both up and down) in the value of their investment. Geared investments involve significantly higher risk than non-geared investments.
The ETF provides exposure to more than 4000 equities.
It has delivered a return of 20.74% over the past year and 21.41% per year since inception in April 2024.
Vanguard Australian Shares Index ETF (ASX: VAS)
If index trackers are more your thing, here are two which fit together nicely in terms of diversification.
Vanguard says VAS is Australia's largest ETF, giving investors exposure to the top 300 companies listed on the ASX.
It has a very low management fee of 0.07%, and investors can start off with as little as $200 if they invest through Vanguard itself.
Vanguard says:
The ETF provides low-cost, broadly diversified exposure to Australian companies and property trusts listed on the Australian Securities Exchange. It also offers potential long-term capital growth along with dividend income and franking credits.
Unsurprisingly, VAS' top five investments are the big four banks and BHP Group Ltd (ASX: BHP).
Vanguard says $10,000 invested five years ago would now be worth $14,639.
Vanguard MSCI Index International Shares ETF (ASX: VGS)
Finally, VGS ETF has a much wider remit than VAS, with exposure to about 1300 companies from developed countries, notably excluding Australia so it doesn't double up with VAS.
Vanguard says on its website:
Investing internationally offers greater access to sectors such as technology and health care that aren't as well represented in the Australian share market. The ETF provides exposure to many of the world's largest companies listed in major developed countries. It offers low-cost access to a broadly diversified range of securities that allows investors to participate in the long-term growth potential of international economies outside Australia.
The ETF's largest holdings are in US tech companies including Nvidia, Apple, and Microsoft.
Vanguard said $10,000 invested five years ago would now be worth $19,057.
The management fee for VGS ETF is 0.18%.
