I think exchange-traded funds (ETFs) can be a great way to build a portfolio from scratch, especially on a budget.
With just a few ASX ETFs, investors can gain exposure to different countries, sectors, and investment styles without needing to pick every company individually.
Three ASX ETFs I think could work well in a fresh portfolio are named in this article.
iShares S&P 500 AUD ETF (ASX: IVV)
The first ASX ETF I would consider is the iShares S&P 500 AUD ETF.
The IVV ETF gives investors exposure to 500 of the largest companies listed in the United States. These are businesses with global brands, large customer bases, strong balance sheets, and the ability to reinvest heavily in growth.
What I like about this fund is that it adds exposure to areas that are less represented locally, including mega-cap technology, software, digital advertising, semiconductors, and global healthcare.
The S&P 500 will still have weak years. It can fall sharply when markets become nervous. But for a long-term portfolio, I think low-cost exposure to America’s biggest companies is a very strong starting point.
Vanguard FTSE Asia Ex-Japan Shares Index ETF (ASX: VAE)
The second ASX ETF I would look at is the Vanguard FTSE Asia Ex-Japan Shares Index ETF.
The VAE ETF adds something different. It gives investors exposure to Asian markets outside Japan, including economies that can offer a different growth profile to Australia and the United States.
I think this is useful because a portfolio built only around Australia and the US can still miss some important parts of the global economy.
Asia is home to large consumer markets, rising middle-class wealth, technology platforms, manufacturing strength, and long-term economic development.
This ETF is not without risk. Asian markets can be volatile, currency movements can affect returns, and some markets carry higher political and regulatory risk. But I think the risk/reward here is attractive and makes it a great option for a balanced portfolio.
Betashares Australian Quality ETF (ASX: AQLT)
The third ASX ETF I like is the Betashares Australian Quality ETF.
The AQLT ETF gives investors exposure to Australian shares with quality characteristics. Instead of simply owning the broad market, it tilts towards businesses with stronger financial metrics.
A quality-focused ETF can help investors own a more selective slice of the local market. This could include companies with stronger profitability, more resilient earnings, or better balance sheet characteristics than the average ASX share.
It is not a guarantee of outperformance, but I think it could stack the odds in your favour.
Overall, I believe the AQLT ETF could sit alongside broader global exposure and provide a more disciplined way to own Australian shares.
Foolish takeaway
A fresh portfolio does not need dozens of holdings to be sensible. I think the priority is getting broad exposure, keeping costs reasonable, and avoiding too much reliance on one market.
These three ETFs would not be perfect every year, but together they could give investors a simple foundation across global leaders, Asian growth, and quality Australian shares.
The post 3 ASX ETFs I’d buy to build a portfolio from scratch appeared first on The Motley Fool Australia.
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More reading
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- 5 years ago, $10,000 bought 274 iShares S&P 500 ETF (IVV) units. But how many would it buy now?
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Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended iShares S&P 500 ETF. The Motley Fool Australia has recommended iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.