I think exchange traded funds (ETFs) are one of the easiest ways to add some diversification into your portfolio. Not only do you get 1 share that tracks hundreds (or even thousands) of underlying stocks, most ETFs are also extremely cheap – meaning you don't have to pay too much for the privilege (unlike many managed funds).

So, if I were to build a $100,000 ETF portfolio looking for maximum diversification and risk management, here's what I would do.

Vanguard Australian Shares Index ETF (ASX: VAS) – $30,000

A healthy first dose of capital goes to VAS. I think this ETF is one of the best market-wide ASX-tracking funds available – with an ultra-cheap fee of just 0.1%.

With VAS, you are getting exposure to the top 300 companies in Australia with everything from Telstra Corporation Ltd (ASX: TLS) and Commonwealth Bank of Australia (ASX: CBA) to Afterpay Touch Group Ltd (ASX: APT).

I think the ASX is a top-notch market due to its relatively high dividend yield (currently 4.06% plus franking) and some patriotic bias on my behalf.

Vanguard U.S. Total Market Shares Index ETF (ASX: VTS) – $20,000

The US is the undisputed heavyweight champion when it comes to quality companies to invest in. In fact, 9 out of the top 10 largest public companies in the world are American, so they must be doing something right.

With VTS, you are getting coverage of over 3,500 US companies, for the rock-bottom fee of 0.03% (making VTS one of the cheapest ETFs available on the ASX). You are getting everything from Apple, Microsoft, Berkshire Hathaway and Amazon to Tesla, Uber, and Exxon Mobil with this fund, making it a great investment to buy-and-hold in my opinion.

Vanguard FTSE Emerging Markets Shares ETF (ASX: VGE) – $30,000

I think an exposure to the emerging markets of the global economy is a great place to be investing right now. I don't think anyone thinks that countries like China, Taiwan, India and Brazil won't continue to grow and develop throughout the rest of this century. VGE gives you exposure to all of these and more.

The management fee on this ETF is a little higher at 0.48%, but this is still cheap compared to similar offerings in this space.

ETFS Physical Gold ETF (ASX: GOLD) and Vanguard International Credit Securities Index ETF (ASX: VCF) –$10,000 each

Bonds and gold are two traditional asset classes that investors employ for some downside protection against shares, and so I think both assets have a place in our portfolio. Shares (although lucrative) are highly volatile and so having some hedges in your share portfolio can really help you out in a market crash. Luckily there's an ETF for that, and both GOLD and VCF offer easy exposure to both the bond market and the yellow metal. IAF charges a fee of 0.3% whilst GOLD will cost you 0.4%.

Foolish takeaway

I think this collection of ETFs will provide a solid, well-diversified portfolio that you can really just set and forget (with the odd rebalancing). Through 5 simple ETF shares, you are getting exposure to thousands of global companies across 3 asset classes – that's got to be worth some thought!

The post How I would build a cheap $100,000 ASX ETF portfolio appeared first on The Motley Fool Australia.

Exchange traded funds (or ETFs) are a great way to add diversity, balance and ballast to a portfolio. By investing in dozens or hundreds of stocks and assets in one fund, you can easily gain exposure to a tricky field of investing (such as small-cap stocks or bonds) that you might otherwise feel uncomfortable with.

Here's a $100,000 model portfolio, using some diverse ASX ETFs that you may want to check out if you're interested in pursuing a similar strategy.

iShares Core S&P/ASX 200 ETF (ASX: IOZ) – $25,000

This ETF tracks the ASX200 benchmark, which is what we generally use to measure the performance of the Aussie stock market. This is because the ASX200 follows the biggest 200 public companies in Australia – every big Australian company you can think of will be in there – Coles Group Ltd (ASX: COL), Afterpay Touch Group Ltd (ASX: APT) and National Australia Bank Ltd (ASX: NAB) to name a few. Throwing in a bit of home bias, IOZ would make a good foundation for any portfolio and I'm very happy with its presence here.

Vanguard International Shares Index Fund (ASX: VGS) – $25,000

With this ETF, you are getting a slice of 1,595 companies that reside beyond our shores – which adds some much-needed international balance (in my opinion).  VGS holds companies across the USA, UK, Japan and other advanced economies but is not hedged to our Australian dollar, so any currency fluctuations may impact your investment's value. Some of VGS's top companies include Johnson & Johnson, Visa, Amazon and Royal Dutch Shell. Australia only makes up about 2% of the global share market, so looking beyond our shores seems prudent to me.

Vanguard International Credit Securities Index (Hedged) ETF (ASX: VCF) – $25,000

Adding some ballast to your portfolio is always a good idea, and especially pertinent at our current point of the share market cycle. VCF invests in bonds rather than shares and is also currency hedged – meaning currency changes won't affect the fund's value. Bonds are considered a safer and more conservative investment which often outperform shares during bear markets. VCF invests in investment grade bonds issued from government-owned entities as well as corporations, giving you a slightly higher income than you may get from pure Treasury bonds.

BetaShares Global Cybersecurity ETF (ASX: HACK) – $25,000

I've thrown this one in for a bit of fun, but I also think it might have some real growth potential! HACK (yes, that's the ticker) invests in the Nasdaq Cybersecurity Index, tracking mostly US companies that are at the forefront of the cybersecurity and cyber-safety industry, which (I think) is only going to grow in importance over the decades to come as we become ever-more connected online. Some of its top holdings include Symantec Corporation, Cisco Systems Inc. and Raytheon Co.

Foolish Takeaway

With this model portfolio, you can see how simple crafting a balanced investment strategy can be using ETFs. The first three, in particular, can be used very well as diversification vehicles, and if you're feeling confident, HACK might be a good bet as well.

The post How I would build a simple $100,000 ASX portfolio using ETFs appeared first on The Motley Fool Australia.

With the Reserve Bank of Australia yesterday lowering interest rates (again) to their lowest levels ever (again), its becoming harder and harder to derive an income from anything that isn't shares or property. Fixed-interest investments, term deposits, and savings accounts are now starting to (metaphorically) resemble a mattress in terms of uses for your cash. During these times, it's a good idea to think outside the box and get your yields from a wide range of sharemarket instruments.

Here are 2 ASX exchange traded funds (ETFs) that might be worth a look if you need something better than bedding to put your money.

Vanguard International Credit Securities Index ETF (ASX: VCF)

This ETF from Vanguard holds a portfolio of high-quality investment-grade bonds from around the world. There are no government bonds held, but bonds from government-guaranteed or -owned entities are included, as well as corporate bonds rated BBB- or higher. The lack of government bonds helps add some yield without too much extra risk and makes this ETF a good way to get some exposure to yield-bearing debt instruments, in my opinion. VCF has a running yield of 2.98% and has returned 6.25% over the past year, which isn't a bad result. VCF has a management cost of 0.3% per annum.

iShares S&P/ASX Dividend Opportunities ETF (ASX: IHD)

This ETF is run by BlackRock (the largest asset manager in the world) and invests in a portfolio of 50 high-yielding Australian equities. Why own one dividend-payer when you can own 50 in one share? The beauty of an index fund like IHD is that you will only ever find high-yielding companies in your holdings. If a company ceased to pay a dividend, it will be dropped from the ETF and replaced with another who will. IHD's current top holdings include South32 Ltd (ASX: S32), Alumina Ltd (ASX: AWC) Commonwealth Bank of Australia (ASX: CBA) and Wesfarmers Ltd (ASX: WES). IHD has a nice trailing yield of 7.23%, pays distributions quarterly, and also has a management fee of 0.3% per annum.

Foolish takeaway

With either of these two ETFs, you have a good choice for income (in my opinion). VCF would be a good way to get exposure to some of remaining the bonds that are paying a decent yield, but IHD has a very nice income paid quarterly – so not exactly Sophie's choice with these ETFs!

The post 2 top ASX ETFs for easy income appeared first on The Motley Fool Australia.