Building up an ASX share portfolio from scratch is no easy feat. For a beginner investor, there are so many shares to choose from, so many places to get advice, and so little time.
So let's make the whole process easier by discussing three ASX shares I would use to start a share portfolio from scratch today.
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3 ASX shares I would use for a beginner portfolio
Vanguard Australian Shares Index ETF (ASX: VAS)
I think a beginner investor should start simple, and there are fewer investments simpler than this exchange-traded fund (ETF). Index funds like the Vanguard Australian Shares ETF hold multiple shares within them, making them very easy to get some healthy diversification right off the bat. In this ETF's case, it holds the 300 largest shares on the market.
That means an investment into this fund is an investment in everything from Commonwealth Bank of Australia (ASX: CB)A, BHP Group Ltd (ASX: BP) and Telstra Corporation Ltd (ASX: LS) to Woolworths Group Ltd (ASX: WOW), Ampol Ltd (ASX: ALD) and JB Hi-Fi Limited (ASX: JBH), all in one easy investment.
This ETF will give an investor the returns of the broad Australian share market, no more no less. It has returned an average of 8.79% per annum, including dividend returns, since its inception in 2009. That includes its competitive fee of 0.1% per annum.
iShares S&P 500 ETF (ASX: IVV)
ASX shares are great. But the reality is that most Australian investors don't bother looking beyond our shores, happy with the dividends and franking credits that shares like CBA, Telstra and Westpac Banking Corp (ASX: WBC) offer.
But the US markets are home to companies that are just on another level to our best businesses. Think Apple, Alphabet (owner of Google), Amazon, Mastercard, McDonald's, Tesla and Netflix.
These are some of the best companies on the planet and are all found in this index fund that tracks the 500 largest American companies. And again, you can get all of them in one, simple investment.
As such, this ETF can add even more diversification, geographic as well as currency, to a beginner portfolio. This ETF has averaged a return of 17.26% per annum over the past decade.
MFF Capital Investments Ltd (ASX: MFF)
Our last two investments have been simple index funds. But MFF Capital – a listed investment company (LIC) – adds some active management to our starter portfolio.
MFF, as a LIC, doesn't blindly track an index. Instead, the company owns a portfolio of other shares itself, which its management team runs on behalf of its investors. Its current boss is Chris Mackay, who is one of the co-founders of Magellan Financial Group Ltd (ASX: MFG).
MFF typically invests in a small portfolio of quality US shares. Some of its long-term top holdings include Mastercard, Amazon, Visa, American Express and Microsoft. I think this LIC is a great way of adding some investing expertise to a portfolio and compliments our two index funds nicely.
