INVSTR038 How to build a diversified portfolio with ASX ETFs (563 words)

ASX ETFs offer a way to diversify your investment portfolio without the effort and the risk of buying and selling shares in individual companies. This article explains how to get started in ASX ETFs by selecting your core asset classes, allocating your funds, reinvesting and monitoring.

Diversification is key when it comes to creating an investment portfolio.

Despite the temporary, sudden downturns caused by the 2007-2009 global financial crisis and the 2020-2021 COVID pandemic, the value of the ASX increased by more than 160% between 2000 and 2024, as evidenced by the growth in the ASX 200 market index. This demonstrates that it’s better to invest in a variety of shares rather than sticking to just a few.

You can create your own extremely diversified share portfolio by investing in ASX Exchange Traded Funds (ETFs). Even if your starting investment amount is relatively small, ETFs will deliver a level of diversification that would be impossible if you invested in individual listed companies.