How I would build an ASX portfolio with just 3 investments

A portfolio does not need dozens of holdings to cover a lot of ground.

With three carefully chosen investments, I think an investor could gain exposure to global growth, dependable infrastructure, and a business with substantial room to expand.

The key is giving each holding a clear job.

Start with global quality

I would make VanEck MSCI International Quality ETF (ASX: QUAL) the largest holding.

This exchange-traded fund (ETF) provides exposure to international companies selected using measures such as profitability, balance sheet strength, and earnings stability.

I like that approach because the global share market contains thousands of businesses, but they are not all equally attractive. A quality filter can direct more of the portfolio towards companies that have already shown an ability to generate strong returns without relying heavily on debt.

These businesses may sell software, medicines, consumer products, industrial equipment, or financial services. What connects them is the financial strength that can support continued investment through changing economic conditions.

International shares also give Australian investors access to industries and business models that are less prominent on the ASX.

I would expect this holding to do most of the long-term compounding.

Add dependable infrastructure

The second investment would be APA Group (ASX: APA).

APA owns and operates energy infrastructure, including pipelines and other assets that help move and store energy around Australia.

I think infrastructure can bring a different rhythm to a portfolio. Demand is linked to essential services, while many assets are supported by long-term agreements or regulated arrangements.

APA also pays dividends, which could provide some income while the wider portfolio continues growing.

The energy system is changing, and APA will need to invest carefully as Australia moves towards a different mix of generation and storage. Debt, interest rates, regulation, and project returns all deserve attention.

Even so, I like the idea of owning assets that remain deeply connected to how homes and businesses receive energy.

Include a long-term growth share

The final investment would be Xero Ltd (ASX: XRO).

Xero has developed accounting software that sits close to the daily financial activity of small businesses. Customers can use the platform for invoicing, payroll, payments, reporting, tax, and cash flow management.

That position gives Xero room to become more valuable to each customer over time.

The company can add services, improve automation, and use data to help business owners make better decisions. Its opportunity in the United States also leaves plenty of space for expansion if execution remains strong.

Xero shares can be volatile, and investors are often asked to pay a high valuation for future growth. I would therefore keep the allocation smaller than the global ETF holding.

For a long investment horizon, I think the company has the potential to become a much larger financial platform.

How I would split the money

I would put around 50% of the portfolio into the QUAL ETF, 25% into APA Group, and 25% into Xero shares.

That split would place most of the money in a diversified global holding while still leaving enough exposure to income and company-specific growth.

The exact percentages could change with an investor’s age, income needs, and tolerance for volatility. Someone closer to retirement may prefer a larger infrastructure allocation, while a younger investor may lean further towards growth.

Foolish Takeaway

A three-investment portfolio places more responsibility on every holding, so I would choose each one carefully and resist the temptation to keep adding shares without a clear reason.

This structure would give me access to established global businesses, essential Australian assets, and a company still building towards a much larger opportunity.

It would remain simple enough to follow, while offering several ways for wealth to grow over the years ahead.

The post How I would build an ASX portfolio with just 3 investments appeared first on The Motley Fool Australia.

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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 Xero. The Motley Fool Australia has positions in and has recommended Apa Group and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.