I think it’s a good idea for every investor to consider exchange-traded funds (ETFs) for their portfolio.
Owning an ETF allows you to invest in a large group of businesses through a single investment, which dramatically improves diversification and reduces brokerage if you wanted to buy many of the businesses yourself.
But there’s still the question of which ETF should you invest in? I think the below two ETFs could make an excellent combination:
Vanguard Australian Share ETF (ASX: VAS)
Every Australian benefits from being invested in the Australian share market. Not only do we have a bigger affiliation and understanding of Australian businesses but we also benefit from the franking credit tax advantage.
The ETF has large holdings in Australia’s biggest businesses such as Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Telstra Corporation Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES). But, there isn’t a lot of exposure to technology businesses through this ETF.
It now has a very low management fee of only 0.1% and a partially franked dividend yield of 4%.
iShares S&P 500 ETF (ASX: IVV)
What the ASX offers in income it probably lacks in long-term growth potential with most of the leading ASX businesses sticking to domestic markets.
The S&P 500 could be a great option to boost the growth rate of your portfolio. It’s invested in many of the large global businesses that are listed in the US on the NASDAQ and New York Stock Exchange. The ETF’s top holdings are well-known names like Microsoft, Amazon, Facebook, Alphabet, Apple and so on. I can’t think of a better group of blue chips I’d rather own.
The global underlying earnings of the ETF make this an excellent contender for it to be called one of the best ETF options on the ASX.
It has an annual management fee of just 0.04%, which is exceptionally low and makes it worth holding in a portfolio.
Whilst it does have a much lower dividend yield compared to the ASX index, it is growing at a much faster pace.
I think both of these ETFs are good options for investors due to their low costs, and a portfolio of just the two of them could be a good mix.
But, I think it’s possible to beat the market whilst generating a good level of dividend income, which is why I’m attracted to these top ASX shares.
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Hint: These are 3 shares you’ve probably never come across before.
They’re not the banks. Not Woolies or Wesfarmers or any of the “usual suspects.”
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The names of these top 3 dividend bets are all included. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.
- NEW: Free report names top 3 ASX dividend shares to buy for 2019
- Top analysts name their top 3 ASX blue chip shares for 2019
- Richest man alive issues dire warning
- 3 quality dividend shares to boost your income
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Wesfarmers Limited. 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 Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019