Exchange-traded funds (ETFs) are becoming more popular every year, they provide easy access for regular investors to get exposure to a large number of shares through a single investment with low costs.
Two of the leading ETF providers in Australia are Vanguard and BetaShares, I'm going to mention an ETF from each of them in this article:
Vanguard Australian Share ETF (ASX: VAS)
This ETF is over $3.2 billion in size, making it one of the largest Australian-domiciled ETFs on the ASX. The ETF aims to track the return of the S&P/ASX 300 Index before taking into account fees, expenses and tax.
As the ASX 300 Index might suggest, this ETF gives exposure to around 300 of the largest companies and property trusts on the ASX. This level of diversification is quite attractive, although a sizeable portion of the ETF is invested in the big banks of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB), which lessens diversification.
One benefit of an Australian ETF like this one compared to internationally-focused ones is that the income yield is much higher – Vanguard has calculated the dividend yield is 4.4% before franking credits are included.
The total management fees and costs amount to 0.15% per annum, which is a lot cheaper than the cost of a lot of ASX active managers.
This ETF is one of the best ways to invest broadly across the ASX.
BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ)
The best way to beat a broad index-based ETF like the Vanguard Australia one is to go for investments that can grow much faster than the market average. That's why this Global Robotics and Artificial Intelligence ETF provided by BetaShares could be an interesting choice.
Companies involved in the production or use of robotics and automation products and services could be one of the most exciting sectors over the next couple of decades.
BetaShares says that robotics and artificial intelligence is a transformational technological megatrend, with the ability to disrupt multiple industries due to significant economic incentives related to ageing populations, rising labour costs, and opportunity for performance improvements.
Its largest ten holdings are: Intuitive Surgical, Mitsubishi Electric, Keyence, Abb, Fanuc, Daifuku Co, SMC, Omron, Nvidia and iRobot.
With a management fee cost of 0.57% it's not exactly cheap compared to some ETFs, but over the next decade it could generate a lot of growth.
Foolish takeaway
Both of these ETFs could work well with any portfolio, but the idea of investing in robots and AI sounds like it could generate the stronger returns over the next 20 years with how the world is going increasingly technological.
