Switch on the core four

ETFs give investors access to a basket of stocks or bonds in one trade. By combining a few different ETFs together, you can build a portfolio made up of lots of different markets and asset classes. 

This is called diversification, and it can help your portfolio perform better in the long run, as strong performance in one investment may balance out a downturn in another.

One way of potentially making your portfolio more balanced is to use a 'core-satellite' approach (think of planets revolving around the sun).

• The core — the sun at the centre — is typically made up of long-term, relatively lower-risk investments. These may deliver lower returns but should help provide more stable returns within your portfolio.
• The satellites — the planets — are potentially higher-risk investments that can seek to maximise returns or build greater diversity.

Investing this way may help to balance low cost, efficient, potentially more stable market returns with potentially stronger performance from more niche select investments.

A resilient portfolio is much like a balanced diet. You need a good mix of different food groups for optimal health. 

When it comes to building a diversified global multi-asset portfolio, four basic ingredients - Australian equities, Australian fixed income, cash and international equities - may help get you started.

iShares’ four core ETFs offer broad exposure to stocks and bonds by following well-known indexes. Over the last five years, the funds have outperformed the majority of their respective category peers.¹

The iShares core four: your recipe for a strong and healthy portfolio.