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2 ETFs to include in an ASX beginner investor portfolio

Here’s why I think the iShares Global 100 ETF (ASX: IOO) and 1 other ASX share are great for a diversified beginner portfolio today
The post 2 ETFs to include in an ASX beginner investor portfolio appeared first on Motley Fool Australia. –

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It’s my belief that exchange-traded funds (ETFs) can be a great option for beginner investors. Most ETFs don’t offer the same risk levels that investing in an individual share does. An ETF can’t go bankrupt for instance. And since ETFs usually hold a broad basket of individual shares within them, the risks of a single company tanking your entire investment are also very low. As such, I would happily recommend an ETF to a beginner ASX investor as part of a diversified, balanced portfolio. Here are 2 that I think are worth a look today:

2 ASX ETFs for a beginner investor’s portfolio

iShares Global 100 ETF (ASX: IOO)

This ETF has a very simple mandate: holding 100 of the largest companies in the world that are listed in advanced economies. Most (72.7%) of the companies in this ETF are US-listed, but Switzerland, the United Kingdom, France, Germany, and Japan also have a presence. Some of the companies with the largest presence in IOO include Apple Inc, Amazon.com Inc, Johnson & Johnson, and Nestle SA.

This ETF’s very nature makes it a remarkably stable investment, and thus a great one for a beginner investor in my view. All of the companies in this ETF got to where they are for a reason, and many (such as Apple and Amazon) have thrived in 2020 under the dire circumstances of the pandemic. Thus, I just don’t think you can go wrong with a long-term investment in this one as part of a balanced share portfolio.

Vanguard US Total Market Shares Index ETF (ASX: VTS)

This ETF from Vanguard is a little less diverse than iShares Global 100. Rather than holding a basket of companies from around the world, VTS instead simply holds every share listed on the US markets (all 3,566 of them). The US has always been a great market to invest in – it is the country that produced Amazon, Apple, Netflix Inc, Berkshire Hathaway Inc, and Tesla Inc after all. You’ll of course find all those companies in the fund, as well as Microsoft Corporation, Facebook Inc, Visa Inc, and almost every other American company you can think of.

VTS has returned an average of 16.95% per annum over the past decade, and charges a management fee of just 0.03% per annum (or $3 for every $10,000 invested). As such, I think this is another ASX ETF which would work well for a beginner portfolio today. As with IOO, I think one can confidently buy VTS and throw it in the bottom drawer, content that it will continue to build wealth on your behalf.

Foolish takeaway

Both of these ETFs offer access to top, global companies outside the ASX. Because of this, I think using either ETF as part of a balanced and diversified portfolio of shares is a great move for a beginner investor today.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Facebook, Johnson & Johnson, Tesla, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Berkshire Hathaway (B shares), Facebook, Microsoft, Netflix, Tesla, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, long January 2022 $1920 calls on Amazon, and short December 2020 $210 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Amazon, Apple, Berkshire Hathaway (B shares), Facebook, and Netflix. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post 2 ETFs to include in an ASX beginner investor portfolio appeared first on Motley Fool Australia.

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