I think it's a good idea for every investor to consider exchange-traded funds (ETFs) for their portfolio.
Owning an ETF allows you to invest in a large group of businesses through a single investment, which dramatically improves diversification and reduces brokerage if you wanted to buy many of the businesses yourself.
But there's still the question of which ETF should you invest in? I think the below two ETFs could make an excellent combination:
Vanguard Australian Share ETF (ASX: VAS)
Every Australian benefits from being invested in the Australian share market. Not only do we have a bigger affiliation and understanding of Australian businesses but we also benefit from the franking credit tax advantage.
The ETF has large holdings in Australia's biggest businesses such as Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Telstra Corporation Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES). But, there isn't a lot of exposure to technology businesses through this ETF.
It now has a very low management fee of only 0.1% and a partially franked dividend yield of 4%.
iShares S&P 500 ETF (ASX: IVV)
What the ASX offers in income it probably lacks in long-term growth potential with most of the leading ASX businesses sticking to domestic markets.
The S&P 500 could be a great option to boost the growth rate of your portfolio. It's invested in many of the large global businesses that are listed in the US on the NASDAQ and New York Stock Exchange. The ETF's top holdings are well-known names like Microsoft, Amazon, Facebook, Alphabet, Apple and so on. I can't think of a better group of blue chips I'd rather own.
The global underlying earnings of the ETF make this an excellent contender for it to be called one of the best ETF options on the ASX.
It has an annual management fee of just 0.04%, which is exceptionally low and makes it worth holding in a portfolio.
Whilst it does have a much lower dividend yield compared to the ASX index, it is growing at a much faster pace.
Foolish takeaway
I think both of these ETFs are good options for investors due to their low costs, and a portfolio of just the two of them could be a good mix.
