The portfolio shortcut worth knowing about

Building an investment portfolio can quickly become complicated.  

You might start with an ETF providing exposure to Australian shares, then add global companies, bonds, emerging markets, infrastructure and currency-hedged investments. Before long, a straightforward investment plan can become a long list of holdings that needs to be monitored, maintained and regularly rebalanced.

But building a diversified portfolio doesn’t necessarily require managing each piece yourself.

Diversified ETFs bundle multiple asset classes and underlying investments into a single trade, providing a simpler way to build a portfolio while still giving you exposure to a wide range of asset classes.

The important decision is not necessarily which individual investments to choose, it’s how much of your portfolio you want exposed to growth assets and how much you want held in more defensive investments.

We have expanded our Diversified ETF range with three new options:

The range also includes the Betashares Diversified All Growth ETF (ASX: DHHF), which invests entirely in growth assets.

The range also includes the DHHF Diversified All Growth ETF, which invests entirely in growth assets.

The difference between these portfolios is primarily their asset allocation. Each Fund provides exposure to a broad mix of Australian and global shares, while the Balanced, Growth and High Growth options also include cash and fixed income.

This means the choice between them comes down to several practical questions:

A higher allocation to shares may provide greater long-term growth potential, but it can also result in larger falls during periods of market stress. A portfolio with more cash and bonds may provide a smoother experience although its long-term growth potential may be lower.

Each of the new ETFs provides exposure to approximately 2,500 Australian and global companies and 12,000 bonds through a portfolio of underlying Betashares ETFs.

That includes exposure to:

The Funds are also designed to maintain their intended risk profiles over time with asset allocations monitored and periodically rebalanced.

For someone managing their own portfolio, this can remove one of the more difficult parts of investing: deciding when and how to rebalance.

Tax may not be the first thing that comes to mind when choosing a portfolio, but it can affect how much of your investment return you ultimately keep.

The Government has announced changes to Australia’s capital gains tax framework that are due to apply from 1 July 2027. The reforms will replace the existing 50% CGT discount with inflation-based indexation and introduce a minimum 30% tax rate on affected real capital gains. The changes will apply to capital gains accruing from 1 July 2027 when they are realised.

This puts a greater focus on how portfolios are structured and how often assets are bought and sold. The diversified funds have been designed with several features that may help support more tax-efficient outcomes:

The funds use ETFs as their underlying investments rather than unlisted managed funds.

ETFs can be more tax-efficient than actively managed unlisted funds because they generally have lower portfolio turnover and mechanisms that can help limit capital gains being passed on to continuing investors. You can read more about the potential tax advantages of ETFs in this article.

The fund-of-funds structure allows capital gains and losses across the underlying portfolio to be offset within the diversified ETF when an investor sells.

This may become increasingly relevant under an inflation-based CGT framework, where the tax treatment of gains and losses held across separate investments may not always work in the same way.

Rebalancing is necessary to keep a portfolio aligned with its target asset allocation, but unnecessary buying and selling can create additional turnover and potentially realise capital gains.

The rebalancing strategy for the diversified ETFs seeks to minimise unnecessary portfolio turnover while keeping each Fund aligned with its intended risk profile.

The currency-hedged underlying ETFs have elected to use the Taxation of Financial Arrangements regime, known as TOFA.

This may allow certain hedging gains to be deferred and treated on capital rather than income account. In turn, this may help reduce tax drag and support improved after-tax outcomes, depending on an individual’s circumstances.

Tax outcomes will vary depending on your personal situation. Betashares is not a tax adviser, and this information should not be construed or relied on as tax advice. You should obtain professional, independent tax advice before making an investment decision.

A diversified ETF can be used as an all-in-one portfolio solution, particularly if you want broad exposure without managing multiple holdings.

It can also act as a core portfolio holding. You could use one diversified ETF as the foundation of your portfolio, then add other investments around it if you want targeted exposure to particular themes, sectors or strategies.

Choosing the right portfolio still requires careful consideration of your objectives, investment timeframe and tolerance for risk. But once that decision has been made, a diversified ETF can provide broad diversification and ongoing rebalancing in a single ASX trade, reducing the need to manage each holding yourself.

Learn more about Betashares Diversified ETF range here.