If you want to add growth shares your investment portfolio but you’re not comfortable picking individual shares, consider adding the ASX ETFs I’ve outlined below.
What Are ETFs?
Exchange traded funds, or ETFs, are investment funds that are listed on a securities exchange. They can be managed funds or index funds, or in other words, active or passive, and the fees are usually lower than an unlisted investment fund.
To learn more about ETFs, check out the Rask Finance video below which compares them to Listed Investment Companies or LICs:
Broadly speaking, share ETFs give an investor exposure to many different shares with a single purchase, offering one of the quickest and easiest methods of achieving diversification. However, they’re not limited to investing in shares. Our website provides a list of all ASX ETFs.
iShares Global 100 ETF
The iShares Global 100 ETF (ASX: IOO) is an option for global growth in shares. With a management fee of 0.40% per year, the ETF has delivered a return of 14.44% over the last 12 months and 11.54% per year over the last ten years.
That’s an impressive long-term track record. However, keep in mind that this performance record is taken during a bull market. Since its inception in 2000, the IOO ETF has returned around 2.52% per year, so it seems heavily exposed to downturns in markets.
Approximately 65% of the ETF is invested in the US and the largest holding is Microsoft Corporation (NASDAQ: MSFT).
Vanguard Diversified High Growth Index ETF
The Vanguard Diversified High Growth Index ETF (ASX: VDHG) has the lowest management fee of the two funds at 0.27% per year. The VDHG ETF covers Australian shares, international shares, global bonds, emerging markets and Australian fixed interest, providing the investor with a significant diversification benefit. Basically, it’s an all-in-one growth ETF managed and updated by Vanguard.
Year-to-date, the shares are up 16.51% and they’re up 9.6% over the last 12 months. The VDHG ETF gives the investor exposure to a range of Vanguard wholesale funds, making it easier to invest in these unlisted funds.
Summary
The Vanguard fund is relatively new, so it remains to be seen how it will perform over the long term. The iShares ETF should serve as a warning that these types of ETFs can provide high growth in bull markets, but they can also fall steeply in bear markets.
Before investing, I would carefully consider what sort of weighting is appropriate for a high-growth ETF and how it may react to a market downturn.
Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
