Exchange-traded funds (ETFs) could be one of the best ways for most investors to get exposure to the share market.
It's getting harder to beat the market unless you go for the best growth shares at a reasonable acquisition price.
That's why the low-cost provider Vanguard has grown its funds so much over the last decade. Index funds are a great way to generate investment returns with very little returns.
But, the one thing that people can still be a victim to is their behaviour due to the volatility, which is why these two ETFs could be a good way to lower that volatility:
Vanguard Australian Fixed Interest Index ETF (ASX: VAF)
Bonds are one of the most popular asset classes, and this ETF gives us access to mostly Australian Government (Federal and State) and government-related bonds, which I think provides more reliability over the long-term.
This ETF's top five holdings relate to 'Australia' (Commonwealth of), Queensland, New South Wales, Western Australia and Victoria.
The good thing about this bond ETF is the strength of it. Australian governments are financially sound, 74.3% of the ETF has a AAA rating and another 19.2% has a AA rating.
With a management fee of only 0.2% it could be the best way to invest in Australian bonds and a good way to compliment your share portfolio.
Vanguard Australian Property Securities Index ETF (ASX: VAP)
Commercial real estate is another option to consider for a diversified portfolio. This ETF invests in the real estate investment trusts (REITs) in the ASX 300.
Some of its top holdings are Goodman Group (ASX: GMG), Scentre Group (ASX: SCG), DEXUS Property Group (ASX: DXS), Mirvac Group (ASX: MGR) and GPT Group (ASX: GTP).
A lower interest rate has been a great bonus for the REIT sector over the past year, which is how the ETF has delivered a return of 19.25% during the past 12 months.
Vanguard charges a cheap annual management fee of 0.23% with this one, leaving plenty of net returns for us.
Foolish takeaway
Both of these ETFs can provide less volatile returns than shares and an acceptable level of income. If I had to pick one it would be the bond one because I'd prefer to choose my own property shares, but bonds are a completely different thing for my portfolio.
