The ASX ETFs to buy for growth, income, and diversification

One of the reasons I like exchange-traded funds (ETFs) is their simplicity.

ETFs allow investors to gain exposure to a wide range of companies through a single investment. That can make building a diversified portfolio much easier, particularly for those who prefer a more hands-off approach.

Personally, I think ETFs can also be useful tools for targeting different investment goals. 

Some are designed for long-term growth, others focus on income, and some provide diversification across global markets.

If I were thinking about those three goals, here are three ASX ETFs that stand out to me.

Vanguard Diversified High Growth Index ETF (ASX: VDHG)

When I think about long-term growth ETFs, the Vanguard Diversified High Growth Index ETF is one of the first that comes to mind.

What I like most about the VDHG ETF is that it provides exposure to thousands of companies around the world through a single investment. The fund invests primarily in global and Australian shares, with smaller allocations to other asset classes like bonds.

The portfolio is heavily tilted toward growth assets, which is exactly what I would want if I were investing for the long term. Instead of relying on the Australian market alone, investors gain exposure to global economies and industries.

Personally, I think that global diversification can be very powerful over long periods of time. It allows investors to participate in the growth of companies and industries that simply don’t exist on the ASX.

Betashares S&P Australian Shares High Yield ETF (ASX: HYLD)

For investors focused on income, the Betashares S&P Australian Shares High Yield ETF could be worth a closer look.

This ETF is designed to track an index made up of high-dividend-yielding Australian shares. Many of the companies included are well-known ASX dividend payers across sectors like banking, resources, telecommunications, and infrastructure. This includes BHP Group Ltd (ASX: BHP), Telstra Group Ltd (ASX: TLS), and National Australia Bank Ltd (ASX: NAB).

Australia has long been known for its dividend culture, and many companies regularly pay fully franked dividends. That can make income-focused ETFs particularly appealing for investors seeking passive income.

In my view, an ETF like the HYLD ETF could provide exposure to a diversified portfolio of high-yielding shares without needing to select individual dividend stocks.

iShares Global 100 ETF (ASX: IOO)

Another ETF I find interesting is the iShares Global 100 ETF.

This fund focuses on around 100 of the largest and most established companies in the world. These businesses include global leaders across industries such as technology, healthcare, consumer goods, and financial services.

What stands out to me about the IOO ETF is the quality of the companies it holds. Many of the businesses in the index are dominant global brands with strong competitive advantages and global revenue streams.

For Australian investors, this type of exposure can complement a domestic portfolio nicely. The ASX is heavily concentrated in banks and miners, so global ETFs like this can add exposure to sectors such as technology and global consumer brands.

Foolish takeaway

There is no single ASX ETF that suits every investor.

But in my view, different ETFs can play different roles within a portfolio. Some can help drive long-term growth, others can generate income, and some provide valuable global diversification.

The VDHG ETF offers broad global exposure with a strong growth focus. The HYLD ETF provides access to high-dividend Australian companies. And the IOO ETF gives investors exposure to some of the largest and most influential businesses in the world.

The post The ASX ETFs to buy for growth, income, and diversification appeared first on The Motley Fool Australia.

More reading

• Why I think these Vanguard ETFs could outperform the ASX 200
• $5,000 to invest? Here’s how I’d split it across the ASX
• New to the share market? Here are 3 ASX ETFs to buy for easy investing
• The lazy investor’s guide to ASX ETFs
• Invest $40,000 in this ASX dividend stock for $140 in monthly passive income

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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.