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.

More reading

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• Here’s what brokers tip for Xero shares over the next 12 months
• Here’s what $10,000 invested in ASX tech shares 5 years ago would be worth now
• 3 ASX ETFs with strong long-term growth potential

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.

It was a bit of a sour end to the trading week for the S&P/ASX 200 Index (ASX: XJO) and many ASX shares this Friday. After a bumpy trading week that saw the markets swing from gains to losses, investors ended up siding with the pessimists over today’s session.

After keeping to red territory all day, the ASX 200 ended up closing 0.5% lower. That leaves the index at 8,796.7 points as we head into the weekend.

This rough day for the Australian markets followed a similar session on Wall Street overnight.

The Dow Jones Industrial Average Index (DJX: .DJI) was not in a good mood, dropping 0.2% lower.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) was punished even harder, falling a nasty 1.47%.

But let’s return to the local boards now and take a closer look at what was happening with the various ASX sectors this Friday.

Winners and losers

No one should be surprised to see that there were more losers than winners today.

Leading said losers were gold stocks. The All Ordinaries Gold Index (ASX: XGD) was slammed this session, crashing 4.95%.

Broader mining shares were also slammed, with the S&P/ASX 200 Materials Index (ASX: XMJ) tanking 2.91%.

Tech stocks sank hard as well. The S&P/ASX 200 Information Technology Index (ASX: XIJ) cratered 1.6%.

Next on the red list were healthcare shares, illustrated by the S&P/ASX 200 Healthcare Index (ASX: XHJ)’s 0.34% dive.

Our final losers this Friday were financial stocks. The S&P/ASX 200 Financials Index (ASX: XFJ) lifted 0.1% by the closing bell.

Let’s turn to the green sectors now. It was utilities shares that fronted the pack, with the S&P/ASX 200 Utilities Index (ASX: XUJ) surging up 1.77%.

Energy stocks ran hot, too. The S&P/ASX 200 Energy Index (ASX: XEJ) soared 1.66% higher this Friday.

Communications shares were also in demand, as you can see from the S&P/ASX 200 Communication Services Index (ASX: XTJ)’s 1.62% lift.

Consumer staples stocks weren’t left out either. The S&P/ASX 200 Consumer Staples Index (ASX: XSJ) bounced up 1.06% today.

Real estate investment trusts (REITs) came next, with the S&P/ASX 200 A-REIT Index (ASX: XPJ) seeing its value spike 1.02%.

After REITs, we had industrial shares. The S&P/ASX 200 Industrials Index (ASX: XNJ) enjoyed a 0.65% improvement this session.

Last and least, consumer discretionary stocks just stuck the landing, evidenced by the S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ)’s 0.48% jump.

Top 10 ASX 200 shares countdown

Today’s top stock was once again the financial services company AMP Ltd (ASX: AMP). AMP shares rocketed another 6.32% today to close at $2.02 each.

This seems to be a continuation of the goodwill we saw yesterday following the earnings update that was released.

Here’s the rest of today’s best: 

ASX-listed company	Share price	Price change
AMP Ltd (ASX: AMP)	$2.02	6.32%
Brambles Ltd (ASX: BXB)	$19.44	3.46%
Woodside Energy Group Ltd (ASX: WDS)	$30.46	3.29%
Coles Group Ltd (ASX: COL)	$23.21	2.88%
Amcor plc (ASX: AMC)	$63.77	2.84%
Telstra Group Ltd (ASX: TLS)	$5.04	2.65%
Bega Cheese Ltd (ASX: BGA)	$6.10	2.52%
Domino’s Pizza Enterprises Ltd (ASX: DMP)	$17.62	2.50%
Ingenia Communities Ltd (ASX: INA)	$4.29	2.39%
Generation Development Group Ltd (ASX: GDG)	$3.56	2.30%

Enjoy the weekend!

Our top 10 shares countdown is a recurring end-of-day summary that shows which companies made big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Domino’s Pizza Enterprises. The Motley Fool Australia has positions in and has recommended Amcor Plc and Telstra Group. The Motley Fool Australia has recommended Domino’s Pizza Enterprises and Generation Development Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Investing in exchange-traded funds (ETFs) seems to grow more popular on the ASX with each passing year. ASX investors seem to love buying ASX ETFs, likely for their simple, hands-off nature and cheap market access, which they are well known for.

The ASX’s most popular ETFs, such as the Vanguard Australian Shares Index ETF (ASX: VAS), seem to increase their assets under management like clockwork every month. And the number of smaller, thematic ETFs has exploded in recent years. These days, you can pretty much find any ETF you can think of on the ASX.

This trend, in my view, is largely a happy one. ETFs can give ASX investors cheap access to industries and markets that were previously unavailable (or available but prohibitively expensive) to Australian investors. Australians who might have never taken the plunge of buying individual ASX shares are happy to part with their dollars when offered cheap, market-wide index funds that can simply be put into the proverbial bottom drawer and never touched again.

However, ETF investing is not without its potential risks and downsides. Today, I’m going to discuss what I consider the biggest red flag for ASX investors to watch out for when considering an ETF investment.

A big red flag when buying ASX ETFs

Any ASX ETF can theoretically find a happy place in an investor’s portfolio. Provided it aligns with their goals and risk tolerances, of course. However, I think there is one factor that should be assessed above all else when analysing your next ETF investment. That factor is the fee that the ETF will charge you.

All ASX ETFs charge their investors an annual fee for their services. That’s fair enough. After all, ETFs need to be maintained, their portfolios kept in line, their dividends distributed, and their investors kept informed. That doesn’t come free.

But although all ETFs are equal when it comes to imposing these fees, some are more equal than others. It is this fee that ASX ETF investors need to be discerning about.

Fees on ASX ETFs are wide-ranging. Some of the cheapest on the market go for under 0.05% per annum. That’s $5 a year for every $10,000 invested. Others are as high as 1%, or even greater.

Whether an ETF charges a fee of 0.05%, 0.5%, or 1% might not sound like a matter of great importance. But it is if you value your cash. Sure, that kind of difference isn’t enough to make a meaningful difference to one’s returns over a year or two. But it certainly starts to add up over five, ten, or 20 years.

When paying 1% can cost you a fortune

Just as returns from investments compound, so too do the lost potential returns of money that is eaten up by these fees. To illustrate, let’s assume one investor puts $100,000 into one ETF that is fee-free. Another investor puts the same amount into a fund that asks 1% per annum. If both ETFs return an average of 10% over 20 years, our 1% fund will turn that $100,000 into just over $600,000. But our fee-free fund will yield almost $730,300.

Yep, that 1% difference is worth more than $130,000 over two decades.

As such, all ASX investors who are thinking about buying an ASX ETF need to consider how much dead money their fund will take from them. A high fee, particularly one over 1% per annum, is, in my view, one of the biggest red flags an ETF can wave at us as investors. Ignore it at your money’s peril.

The post Buying ASX ETFs? Watch out for this red flag appeared first on The Motley Fool Australia.

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• VAS vs. VHY: Which is the better ASX ETF for retirement?
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• How to go from zero to $50,000 with ASX shares

Motley Fool contributor Sebastian Bowen has positions in Vanguard Australian Shares Index ETF. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.