Portfolio diversification with ETFs (2024)

The importance of diversification in your investment portfolio cannot be overestimated. Diversification means spreading your investments across a range of asset classes such as shares or bonds, geographic regions and industry sectors – and within an asset class, spreading your money across multiple individual investments.

Diversification can reduce your investment risk. Different asset classes or investments don’t always perform well at the same time. In a diversified portfolio, if one portion of the portfolio performs poorly over a certain period, this could be offset by the better performance of another part of your portfolio, so you are less likely to suffer a big loss across your portfolio. In simple terms, diversification is about not putting all your eggs in one basket.

ETFs, one of the fastest growing investment products globally, are a simple and cost-efficient way to instantly increase investment diversification to your portfolio.

Betashares ETFs cover a number of major asset classes including:

• Australian shares
• International shares
• Commodities
• Currencies

Allocating your investment funds across several major asset classes can help to protect your portfolio when sharemarkets fall, as other asset classes like commodities and fixed income may continue to perform wellduring sharemarket downturns.

Betashares Diversified ETFs are designed to simplify the process of diversifying your portfolio even further, with the following funds available to trade on the ASX:

• Betashares Ethical Diversified ETFs
• Betashares Diversified All Growth ETF

DHHF is an all-in-one investment solution designed to simplify the process of investing in a diversified share portfolio with the potential for high growth.

DHHF is invested in a blend of large, mid and small-cap equities from Australia, global developed and emerging markets, and provides access to approximately 8,000 equity securities listed on over 60 global exchanges.

DHHF is designed to suit investors who have a very high tolerance for risk and who are therefore willing to accept a high degree of volatility in their portfolio in order to achieve their long-term objective. DHHF is passively blended using ETFs issued by BetaShares and other leading ETF managers to provide an ‘all cap, all world’ investment exposure, and includes ETFs that trade on the ASX, as well as on overseas exchanges.

Betashares Ethical Diversified ETFs are cost-effective, all-in-one portfolio solutions for investors whose priority is investing in a way that aligns with their values.

The Ethical Diversified ETFs provide passively blended exposure to true-to-label, ethically-screened, multi-asset portfolios, and are offered across three risk profiles: Balanced, Growth and High Growth. They are built using BetaShares’ market-leading range of RIAA – certified ethical ETFs*, which now account for over $1.9 billion in funds under management.

^{* The underlying Betashares ETFs have been certified by the Responsible Investment Association Australasia (RIAA) according to the strict operational and disclosure practices required under the Responsible Investment Certification Program. See www.responsibleinvestment.org for details. The Responsible Investment Certification Program does not constitute financial product advice. Neither the Certification Symbol nor RIAA recommends to any person that any financial product is a suitable investment or that returns are guaranteed. Appropriate professional advice should be sought prior to making an investment decision. RIAA does not hold an Australian Financial Services Licence.}

One way to build a more diversified portfolio is to invest into industry sectors that are under-represented in the Australian sharemarket. Another way to diversify portfolios is to tap into sectors that are not readily accessible in the Australian sharemarket.

For example, the technology sector is one of the fastest-growing in the world but is under-represented on the Australian sharemarket. However, Australian investors can use ETFs to easily gain exposure to the global technology sector. Apple, Google, Meta and Amazon – some of the biggest and most exciting companies in the world – can all be accessed through the NDQ NASDAQ 100 ETF in a single trade.

Betashares provides exposure to global growth sectors and companies via our Global Sector ETFs. With one trade on the ASX you can access global growth sectors, countries and regions to take advantage of opportunities that may not be available by investing in Australian-based companies

When building a diversified portfolio, it can pay to look beyond the most common asset classes such as shares and bonds, and consider ‘alternative’ asset classes such as currencies and commodities. Because they historically have had a low correlation with other investments, an allocation to these asset classes can help to reduce portfolio risk.

Institutional investors, such as large superannuation funds and insurers, have been allocating to alternative assets in their portfolios for decades. Individual investors are now able to do the same via a growing range of ETFs that offers exposure as easily as buying a share on the ASX.

Betashares has a number of funds with exposure to these alternative asset classes, including: