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Thanks to their ability to provide exposure to a range of asset classes, it has long been possible to build a low-cost diversified portfolio using only a handful of exchange traded funds (ETFs). But the innovation does not end there: it’s now possible to get a diversified portfolio – with exposure to a range of asset classes – through a single ETF!
The Case for Diversified Multi-Asset Class Portfolios
A multi-asset class portfolio provides exposure to a range of different asset classes of varying risk and return characteristics, such as cash, bonds, Australian and international equities.
As seen in the diagram below, by varying exposure to different asset classes, investors are able to develop a portfolio calibrated to the overall level of risk and expected return they feel most comfortable with. What’s more, as asset classes tend to perform differently over time (i.e. their returns are not perfectly correlated), blending asset class exposure may also improve returns (for given levels of portfolio risk or return volatility) due to the benefits of diversification (point “C” in the diagram below).
How to Create Multi-Asset Class Portfolios
Multi-asset class portfolios form the basis of many long-term core investment portfolios, such as provided by superannuation funds or some investment advisers. In doing so, their asset class exposure can come from either individual securities or managed funds, with the latter either active or passive in nature, and available either on the ASX or unlisted.
Thanks to the advent of ETFs, it is also possible for individual investors – or their advisers – to custom build a diversified multi-asset class portfolio conveniently on the ASX using individual ETFs which provide exposure (either actively or passively) to these asset classes. BetaShares, for example, now has 60 exchange traded products available on the ASX providing exposure to a wide range of asset classes, from cash, bonds and commodities, to Australian and international equities.
But there’s now an even easier approach – diversified ETFs providing exposure to a multi-asset class portfolio, for a given risk profile, all within a single ETF!
BetaShares Diversified ETFs
BetaShares’ series of Diversified ETFs provides indexed exposure to a range of asset classes, such as shares, property securities, bonds and cash, across Australian and global markets. Each ETF’s exposure varies, but, for example, the BetaShares Diversified Balanced ETF provides exposure to around 15,000 individual securities across 60 stock exchanges around the world.
As seen in the table below, asset class exposure within each diversified ETF is carefully blended to suit a particular investor risk profile, ranging from conservative to balanced, growth and high growth.
All ETFs in the series have a management fee of only 0.26% p.a., or $26 p.a. per $10,000 invested, making them the lowest fee diversified ETFs currently available on the Australian market1.
This series of diversified ETFs is also unique on the Australian market in that they use an open construction approach, whereby asset class exposure is achieved using underlying ETFs not only from BetaShares, but also, where considered appropriate, from other leading ETF managers, and including ETFs trading on the ASX as well as on overseas exchanges.
Like all our funds, the BetaShares Diversified ETFs are available on the ASX and can be bought and sold just like shares.
The BetaShares suite of Diversified ETFs aims to appeal to those investors seeking a simple, low cost, all-in-one investment exposure for at least a core part of their portfolio.
Further specific information on each ETF is provided below:
- BetaShares Diversified High Growth ETF (ASX: DHHF) (90% growth, 10% defensive)
- BetaShares Diversified Growth ETF (ASX: DGGF) (70% growth, 30% defensive)
- BetaShares Diversified Balanced ETF (ASX: DBBF) (50% growth, 50% defensive)
- BetaShares Diversified Conservative Income ETF (ASX: DZZF) (25% growth, 75% defensive)
Note: There are risks associated with an investment in the Funds, including asset allocation risk, market risk, currency risk, underlying ETFs risk and index tracking risk. For more information on risks and other features of the Funds, please see the Product Disclosure Statement.
1. Other costs, such as transactional costs, may apply. Please refer to the Product Disclosure Statement for more information.