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My top 3 ETFs for diversification in 2021

Diversified ETFs can provide an easy way to gain exposure to a diverse range of asset classes, sectors, or investment styles.

Greater diversification can smooth out portfolio investment returns, provided that the underlying holdings do not rise/fall at the exact same time or rate. Below is a list of my top 3 diversified equity ETFs for 2021.

Pick #1 – Vanguard U.S Total Market Shares Index ETF AUD VTS ETF (ASX: VTS)

The Vanguard U.S. Total Market Shares Index ETF (VTS) is one of the most diversified US equity ETFs that can be bought on the ASX.

VTS currently has holdings in a whopping 3,586 US-listed companies, with the median company having a market capitalisation $108.92 billion. The VHY management fee payable to own shares in VTS is an extremely low 0.03% per year (p.a.). VTS has generated a health total return of 13.57% p.a over the last 5 years.

VTS’ top 5 holdings include some of the most widely recognised companies in the world: Microsoft Corp (NASDAQ: MSFT), Apple Inc (NASDAQ: AAPL), Amazon.com Inc (NASDAQ: AMZN) Facebook, Inc. Common Stock (NASDAQ: FB) and Alphabet Inc. Class A Common Stock (NASDAQ: GOOGL).

Check out our VTS ETF report.

Pick #2 – Vanguard All-World ex-U.S. Shares Index ETF (ASX: VEU)

The Vanguard All-World ex-U.S. Shares Index ETF (VEU) could be a great choice for those who already have holdings in US stocks or ETFs and would like to get exposure to more international markets. VEU seeks to track the FTSE All-World ex-US Index (before account fees, expenses and taxes).

VEU’s portfolio is primarily allocated across three regions: 39.3% Europe, 28.7% Pacific, and 25.6% Emerging Markets. VEU also has one of the lowest management fees around, at just 0.08% per year. VEU has generated a 5-year total return of 7.18% p.a.

At the end of November, VEU’s 5 largest holdings were Alibaba Group Holding Ltd (NYSE: BABA), Taiwan Semiconductor Manufacturing Co. Ltd., Tencent Holdings Ltd., Samsung Electronics Co. Ltd. and Nestle SA.

View our VEU ETF report.

Pick #3 – BetaShares Ethical Diversified Growth ETF (ASX: DGGF)

The BetaShares Ethical Diversified Growth ETF (DGGF) provides exposure to a selection of ethical Australian and global shares and bonds. The DGGF ETF builds this exposure through holdings in BetaShares ethical ETFs, which in turn only hold shares and bonds which pass positive climate leadership screens and meet a range of ESG criteria.

As of 16 December 2020, DGGF’s asset allocation consists of:

  • Australian and International Bonds 30.1%
  • International equities 42%, and
  • Australian Equities 27.9%.

DGGF has a management fee of 0.39% p.a., which is materially higher than that charged by VTS and VEU.

Click here for another 3 great ethical ETF options.

Check out our DGGF ETF report.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

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Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.
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