The best time to start investing is always now. Whether you’re new to shares or an experienced investor, here are 5 ETFs to consider in 2025.
These aren’t predictions of top performers for the next year – rather a list of quality ETFs I’d be happy to own at any time. But first, a quick refresher.
Exchange-traded funds (ETFs)
The exchange-traded fund, or ETF for short, is in my opinion the easiest way to start investing or to build a passive share portfolio. ETFs are basically a basket of shares – instead of buying shares in one company, you can buy an ETF which gives you a share in dozens or even hundreds of companies.
For example, instead of buying shares of Commonwealth Bank of Australia (ASX: CBA), you could buy units of the Betashares Australia 200 ETF (ASX: A200) and instantly have a stake in the largest 200 companies in Australia, including CBA.
The reason I, and many investors, love ETFs is that they’re a cheap and simple way to build a diversified share portfolio. If you’re a first-time investor, or you just don’t want to dedicate all of your spare time to flipping through annual reports, ETFs are a great choice.
You won’t generate show-stopping returns, but if you consistently add to quality ETFs, you’re almost certain to build wealth over time.
So, here are 5 ETFs I’d consider for 2025.
VAS
Starting with a staple, the Vanguard Australian Shares Index ETF (ASX: VAS) forms the basis of countless Australian share portfolios. It’s a low-cost ETF (0.07% annual fee) that gives you exposure to the largest 300 companies in Australia, like BHP Group (ASX: BHP), CSL Ltd (ASX: CSL), and National Australia Bank Ltd (ASX: NAB).
VAS is a great option as a first investment or to form the core of your share portfolio. In 2025 (or any year) I’d be happy to invest in VAS. Dollar-cost averaging (consistently buying units over time, say each month) is a good way to start building your portfolio.
IVV
Another staple, the iShares S&P 500 ETF (ASX: IVV) is the perfect complement to VAS.
Many investors get bogged down with what’s known as a ‘home country bias’ – investing too heavily in their home market at the expense of other markets.
There are some fantastic Australian companies on the ASX, but many of the biggest and best companies in the world are US-based and you’ll find them in the S&P 500. Think Apple Inc (NASDAQ: AAPL) or Amazon.com Inc (NASDAQ: AMZN).
With a 0.04% management fee, this is one of the cheapest ETFs on the market. Equal parts VAS and IVV can form a strong core for any share portfolio.
MOAT
For the investor who wants a slightly less passive approach, there’s the VanEck Morningstar Wide Moat ETF (ASX: MOAT).
MOAT charges a slightly higher management fee at 0.49% per year, but what you get in return is a more nuanced approach than a straight index ETF. The MOAT ETF applies a ‘filter’ to the US market to find the companies they believe have a strong competitive advantage.
Using the Morningstar Moat Ratings, the MOAT ETF selects companies from the S&P 500 with a ‘wide moat’. The term ‘moat’ is often used in investing to talk about a competitive advantage. A company with a wide moat has a strong and sustainable competitive advantage over the rest of the market.
The idea is that this filter selects for companies which are more likely to outperform the market over time. In the last 10 years, the MOAT ETF has returned just shy of 15% per year.
HACK
Here’s a more speculative idea – the Betashares Global Cybersecurity ETF (ASX: HACK). Apart from having one of the best ticker codes on the market, the HACK ETF invests in a portfolio of around 30 global companies involved in the increasingly-important cybersecurity industries.
The big names in this ETF include Crowdstrike Holdings Inc (NASDAQ: CRWD), Fortinet Inc (NASDAQ: FTNT), and Broadcom Inc (NASDAQ: AVGO).
The management fee is higher than the others on this list at 0.67% per year but the ETF has performed well since inception. Past performance is no indicator of future performance, but I think the prospects for the cybersecurity sector make this an interesting ETF to watch.
FANG
Finally, an ETF for those who are less concerned about diversification – the Global X FANG+ ETF (ASX: FANG).
This ETF invests in the well-known FANG group (Facebook, Amazon, Netflix, and Google) plus six other large disruptive tech companies. It’s a focused thematic ETF that has returned close to 29% per year over the last 3 years.
The high valuations of these tech companies make me pause, but I also wouldn’t bet against the success of the big tech giants. The FANG ETF could make for an interesting tactical position in a diversified portfolio.
