The importance of diversification in your investment portfolio cannot be underestimated and ETFs, one of the fastest growing investment products globally, are a simple and cost-efficient way to instantly add investment diversification.
Diversification can reduce investment risk by allocating your portfolio across a range of different asset classes, sectors or even companies. By spreading your investments across a range of asset classes it means that if one area of your portfolio is not performing another area may be doing well.
Diversification building blocks
BetaShares Funds cover a number of the major asset classes including:
- Australian Shares
- International Shares
Investors often find that allocating to a number or even all major asset classes can be a prudent way to seek to protect portfolios when sharemarkets fall. For example, asset classes like commodities have historically tended to rise when both shares and bonds have fallen.
Diversify into industry sectors that are underweight within the Australian sharemarket
Another way to diversify portfolios is to tap into the sectors that are not readily accessible in the Australian sharemarket.
For example, the global technology sector is one of the fastest growing yet investing in the technology sector has been limited for Australian sharemarket investors given the small number of meaningful technology companies listed here. However, investors are now able to use ETFs to easily access the global technology sector. Apple, Google, FaceBook and Amazon – amongst some of the biggest and most exciting companies in the world can now all be accessed through the BetaShares Nasdaq 100 ETF (NDQ) in a single ASX trade.
Access global growth sectors
BetaShares provides access to global growth sectors and companies via our Global Sector ETFs:
Global Sector Series
|HACK||Cybersecurity including Palo Alto Networks, Symantec and Cisco Systems|
|DRUG||Global Healthcare including Johnson & Johnson, Pfizer and GlaxonSmithKline|
|BNKS||Global Banks including JP Morgan Chase, Bank of America and Citigroup|
|FOOD||Global Agriculture including Monsanto, Deere & Co and Associated British Foods|
|FUEL||Global Energy Companies including Chevron, Exxon and Royal Dutch Shell|
|MNRS||Global Gold Miners including Barrick Gold, Goldcorp and Newmont Mining Corp|
ETFs provide a simple, instant and cost-efficient way to diversify an investment portfolio. With one trade on the ASX you can introduce global growth sectors, countries and regions to take advantage of opportunities not available through investing in single Australian based companies.
While you can never completely eliminate risk from any investment, a properly balanced and diversified portfolio is important to help you achieve your financial objectives.