Exchange-traded funds (ETFs) are a great way for investors to get exposure to a lot of different shares with only one investment.
It's too easy for an investor to invest heavily in one sector, such as Australia's big four banks, then subsequently miss out on all the other growing industries.
ETFs are a great way to get diversification, but there's still the problem of choosing which ETF to invest in. There are a lot of ETFs as well!
I think a one-size-fits-all investment would be Vanguard MSCI Index International Shares ETF (ASX: VGS).
What it invests in
I like this Vanguard ETF more than the other Vanguard ones because it gives investors truly global exposure. It doesn't leave out one region and you don't have to do your own balancing between Vanguard funds like Vanguard US Total Market Shares Index ETF (ASX: VTS) and Vanguard All-World ex-U.S. Shares Index ETF (ASX: VEU).
It invests in around 1,600 shares all around the world, giving it wonderful diversification.
Some of its top holdings include Apple, Microsoft, Amazon, Facebook, Alphabet (Google), Nestle, Berkshire Hathaway, Visa and HSBC.
Performance
You may think that a global index fund probably wouldn't deliver strong market returns.
This ETF has delivered investors a 22.07% return over the last year. Anyone, even Warren Buffett, would be happy with a return like that over one year.
Past performance is not an indicator of future performance but it's a good bet that this ETF will track the long-term upwards trend of the global share market.
Cost
One of the best things about Vanguard is its extremely low-cost options for investors.
If you're going to achieve the average market returns you want your costs to be as low as possible.
Vanguard definitely delivers on the low-cost front with its annual management fee for this fund being only 0.18% per annum.
Foolish takeaway
I think this ETF is made for the most passive of passive investors. You could just buy this one index and get everything you need from it.
