Build your portfolio foundation in one ETF or two

Once you’ve decided to invest in equities, broad, low-cost ETFs can be a sensible place to start. They can give you exposure to hundreds, or even thousands, of companies without needing to pick individual stocks, follow every market move or try to time the perfect entry point.

But there is still an important decision to make before you begin:

Do you want your portfolio foundation built for you, or do you want to build it yourself?

Though there are many ways you could approach this, investors looking to build a diversified equities foundation using Betashares ETFs could consider two potential pathways:

– A single all-in-one ETF: DHHF Diversified All Growth ETF

– Two building blocks: A200 Australia 200 ETF , plus BGBL Global Shares ETF .

Both approaches can help you build a diversified share portfolio covering Australia and global markets. The difference is how much simplicity or control you want along the way.

DHHF is a one-stop-shop equities ETF designed for investors who want the ETF manager to do the heavy lifting.

Instead of selecting and managing multiple investments yourself, DHHF provides access to a diversified portfolio of Australian and global shares through a single ASX trade. The fund is constructed using a passive blend of cost-effective ETFs and is rebalanced quarterly to maintain its target allocations.

The result is a diversified portfolio spanning approximately 8,000 companies across Australia, developed markets and emerging markets, all accessible through a single ETF. Investors gain exposure to companies listed on more than 60 exchanges around the world through one ASX trade.

While DHHF offers simple access and a more ‘hands-off’ approach, it’s important to understand the fund’s risk profile. DHHF is a 100% growth allocation fund, with exposure to equities, and is designed for investors with a long-term investment horizon who are comfortable with the ups and downs of share markets.

DHHF has a management fee of 0.19% p.a.

The second pathway for investors to consider is to build a foundation using two broad, low-cost Betashares ETFs. This approach gives greater control over how investors split their portfolio between Australian and global shares.

– A200: exposure to 200 of the largest companies listed on the ASX
– BGBL: exposure to 1,200+ global companies across developed markets

Together, A200 and BGBL can provide a simple framework for building a diversified equities portfolio while allowing you to decide how much exposure you want to Australian shares versus global shares.

A200 has a management fee of 0.04% p.a. and is the world’s lowest-fee Australian share index ETF. BGBL has a management fee of 0.08% p.a. and is one of the lowest cost ETFs on the ASX.¹

This pathway may suit you if you want more control over your portfolio mix. Instead of choosing one all-in-one equities fund, you decide how much of your foundation goes into Australian shares and how much goes into global shares.

For example, some investors like having a larger allocation to Australian shares because they prefer local companies or want exposure to franking credits — tax credits attached to dividends paid by Australian companies, which can reduce your tax bill. Others prefer a larger global allocation because they want broader access to companies and industries that are more prominent outside Australia.

There is no single shares allocation that is right for every investor. The benefit of combining A200 and BGBL is that you can choose a split between Australian and global shares that reflects your own preferences, objectives and circumstances.

This approach may suit you if you want:
– A distinct Australian shares building block
– A distinct global shares building block
– More control over your Australian versus global equities exposure
– The ability to make further investments to each side separately over time

The trade-off is that you need to make a few more decisions. You need to choose your allocation to each fund and decide where each new contribution goes. You may also need to review your allocation over time. For some investors, that flexibility is a major advantage. For others, it can feel like one more decision to make and manage over time.

At its core, the decision comes down to a simple trade-off:

– DHHF = leave the Australian and global shares allocation to Betashares
– A200 + BGBL = greater control

– If you want one fund to form the core of your share portfolio, DHHF may be the simpler pathway.
– If you like the idea of choosing your own Australian and global split, A200 plus BGBL may be a better fit.

– DHHF is designed for investors who want their diversified growth allocation packaged into one ETF.
– A200 plus BGBL can be considered by investors who want to build the foundation themselves using two broad building blocks offered by Betashares.

– DHHF is a 100% growth allocation fund, which means it can experience significant movement in value based on market ups and downs. Make sure the fund’s risk profile matches your goals, investment timeframe and comfort with volatility.
– The same principle applies to A200 and BGBL. Both provide exposure to shares, and markets can rise and fall. Diversification can help spread risk, but it does not eliminate it.

One reason investors stall is that they feel they need to get this decision exactly right.

But building your foundation is not about finding the perfect answer. It is about choosing a sensible starting point.

Whether you choose DHHF for more simplicity or A200 and BGBL for more control, the most important thing is choosing what feels right for you and beginning to build your investment foundation.