3 exotic ETFs to diversify any ASX stock portoflio

Any one of these three ETFs will boost your portfolio's diversification significantly.

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ASX exchange-traded funds (ETFs) have exploded in popularity on the ASX over the past ten years or so. Investors love ETFs for many different reasons, including their low costs and ease of use as a passive investment.

However, one of the prime reasons investors arguably choose to add ASX ETFs to their share portfolios is because of the diversification they can provide.

ETFs can represent an investment in hundreds, or even thousands, of underlying shares, all in one easy ticker code. As such, it only takes one trade to add a significant level of diversification to even the most concentrated of ASX stock portfolios.

Now, here on the ASX, most investors use ASX index funds for these purposes, sometimes adding American-focused funds like the iShares S&P 500 ETF (ASX: IVV) for an extra diversification boost.

However, ASX ETFs allow us to go much further than the local or American market. So today, let's discuss three exotic ETFs that can inject diversity into any portfolio.

3 exotic ASX ETFs that will diversify any stock portfolio

iShares MSCI South Korea ETF (ASX: IKO)

First up, let's check out this ETF from iShares. The iShares MSCI South Korea ETF represents an investment in the largest 100 or so companies in South Korea.

The South Korean share market is dominated by tech companies, industrial stocks, and financials, which is slightly different from our own ASX.

Among this ETF's top holdings, you'll find familiar names like SamsungHyundaiKia Motors, and LG. All of these companies are globally dominant and provide access to industries that do not have a big presence on the ASX.

If you're looking to add some exotic spice to your ASX stock portfolio, this ETF is a great place to start.

BetaShares FTSE 100 ETF (ASX: F100)

Although the United Kingdom is one of the largest economies in the world, we don't see much investment in British shares on the ASX. You can change that with this fund from Betashares, though. The Betashares FTSE 100 ETF represents an investment in the largest 100 stocks listed on the London Stock Exchange.

I like the London Stock Exchange for ASX investors because its largest holdings tend to be in industries that aren't heavily represented on the ASX. Some of F100's top stocks include pharma giant AstraZeneca, oil titan Shell, consumer staples company Unilever, and tobacco stock British American Tobacco.

This can add a lot of diversification to an ASX-dominated portfolio.

iShares MSCI Japan ETF (ASX: IJP)

Next up, we have another fund from iShares. The iShares MSCI Japan ETF does pretty much what it says on the tin. It allows access to the largest 200 shares listed on the Tokyo Stock Exchange.

Japanese stocks are not easily accessible on the ASX. Yet some of the world's most dominant companies are listed here, including Toyota, Sony, Mitsubishi, SoftBank and Nintendo.

Again, this focus on industrial and manufacturing companies provides some nice balance against the miners and banks that dominate the ASX.

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Motley Fool contributor Sebastian Bowen has positions in Unilever and British American Tobacco. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended iShares S&P 500 ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended AstraZeneca Plc, British American Tobacco P.l.c., Nintendo, and Unilever and has recommended the following options: long January 2026 $40 calls on British American Tobacco and short January 2026 $40 puts on British American Tobacco. The Motley Fool Australia has recommended iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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