Some site functionality may be unavailable due to site maintenance from 01:00 until 09:00 Sunday 21st April. We apologise for any inconvenience caused.

How to build a Self-Managed ETF portfolio

Learn how to build an ETF portfolio that may reduce costs and spread investment risk by understanding your goals and creating a strategy.

Note from Chantal Giles, Head of Wealth Australasia, BlackRock: "By working with an established trading platform like nabtrade in the local market, iShares can build on its commitment to support more Australian investors on their investing journey. ETFs can be used as efficient portfolio construction tools that enable SMSF investors to build a well-diversified portfolio that reflects their market and investment views. The fact that investors can access more granular parts of the global market via an ETF represents how far we’ve come in making investing simpler, efficient, and more affordable for everyone."

Exchange-traded funds, or ETFs, are investment funds that track the performance of specific indexes. With ten main categories available, ETFs are a great way to build a diverse self-managed portfolio.  Available asset classes include Australian shares, international shares, domestic fixed income, international fixed income and global infrastructure, to name a few. 

Whether you are a beginner investor or a financial professional, just like stocks, you can purchase ETFs on Nabtrade. To get you started, the investor tool kit can help you understand your goals for building your ETF investment strategy - whether that be to achieve regular income or capital growth for wealth building. 

Where to begin with building an ETF portfolio 

Building a portfolio using ETFs can seem daunting. The psychology of investing can make it difficult to get started as we worry whether now is the best time to invest. Waiting for the perfect time may not be the best approach and starting to invest sooner rather than later can put the power of time on your side.

Conducting some simple due diligence before investing in ETFs can pay dividends, as not all ETFs are created equal. 

Costs associated with Self-Managed DIY ETF portfolios

To evaluate what a fund costs, you must look beyond the expense ratio. Just like when we go to buy a car, we don't look at a sticker price alone. We also evaluate things like fuel efficiency and expected maintenance costs. 

While an ETF portfolio may be more cost-efficient in terms of fees than a managed portfolio such as a mutual fund, you need to plan for costs such as brokerage fees. These can occur annually, monthly, or per trade, and they vary in price. Brokerage commissions occur in both the buying and selling stages and are often disclosed by the brokerage. 

Another cost to consider includes trading costs, which can be measured with things like a bid ask spread. ETFs with lower trading volume tend to have higher trading costs. You may also want to consider the frequency of a fund’s distributions, as some funds distribute capital gains more regularly than others, which could result in a tax liability. 

Building a diverse Self-Managed ETF portfolio

Diversity within your portfolio helps to create a robust investment strategy, which is vital for resilience throughout economic cycles. ETFs range from low, moderate, and high-risk assets that you can align to suit your investment goals.

ETFs can be used to gain access to:

  • Australian shares
  • International shares
  • Fixed-interest securities, such as government or corporate bonds
  • Cash
  • Credit securities
  • Property
  • Infrastructure
  • Currency 
  • Commodities, such as gold 

But how do you choose which assets — and how much — to put in a portfolio? This is called an asset allocation decision and refers to the mix of stocks, bonds and other assets in a portfolio. Deciding on your asset allocation is one of the most important investment decisions.  

To answer these questions an investor must decide what their risk tolerance is. This may depend on:

  • Your age: The further away you are from expected retirement age the more risk you may be willing to take, knowing you have more time in the market to potentially grow your assets and recover from any near-term losses.
  • Access to the funds: When do you need the money and what do you need it for? Saving for retirement is different than saving for a child’s education, which is different to saving for a house or a “once-in-a-lifetime” holiday. 
  • Amount to invest: How much do you have to invest? In theory, the less you have to invest, the less risk you can take. For most investors, the trick is finding the right balance where you can grow your nest egg without taking on “too much” risk. 
  • Appetite for risk: Can you stomach short-term market volatility? How much risk are you willing to accept in the pursuit of your financial goals? 

Figuring out your risk tolerance isn’t easy, and it can change over time — just like other aspects of your life.

Multi-asset allocation ETFs can serve as a great foundation for your investment portfolio. These all-in-one solutions allow investors to build a diversified portfolio with just one fund. Investors can choose between balanced or growth risk targets through multi-asset ETFs such as iShares Balanced ESG ETF (IBAL) and iShares High Growth ESG ETF (IGRO), which differ by how much of the fund is exposed to stocks or bonds. 

Each iShares multi-asset ETF rebalances back to their target allocation generally quarterly, helping investors implement best practices of diversification and rebalancing with just one click. The funds aim to efficiently capture broad market returns and can also sit alongside satellite investments such as single stocks or active funds to help manage risk. 

For investors that want to further customise their portfolios, a starting point could be individual Core ETFs. These funds provide more granular building blocks for markets or a market segment by seeking to track popular indexes like the S&P 500 or ASX 200. They are often among the lowest cost ETFs available. Investors can change their allocations depending on their investment views. For example, if investors want more exposure to the likes of technology companies such as NVIDIA, Apple, and Tesla, they may want to dial up their exposure to ETFs such as the iShares S&P 500 ETF (IVV).  On the other hand, if investors want to reduce currency risk they may consider using a currency hedged version of the ETF such as iShares S&P 500 (AUD Hedged) ETF (IHVV).

Even the best stocks may perform poorly – especially in times of economic uncertainty. To build resilience into our portfolios, we should think about adding other asset classes which have tended to behave differently than stocks. 

Bond ETFs can be used as part of a multi-asset portfolio to diversify equity risk, for example, through a global aggregate bond ETF such as iShares Global Aggregate Bond ESG (AUD Hedged) ETF (AESG). Bond ETFs can also be used for capital preservation by investing in cash and short duration products such as iShares Core Cash ETF (BILL). Alternatively, investors can seek a higher level of income with corporate bonds, high yield bonds or emerging market debt.

In the new macroeconomic regime, characterised by uncertainty and volatility, it is more important to adopt a disciplined portfolio construction process involving consistently monitoring your investment portfolio and rebalancing accordingly. 

Risks of a DIY ETF portfolio 

Before investing, take time to familiarise yourself with the risks of an ETF portfolio. Depending on your financial situation, these risks may set perimeters for your investment. 

Avoidable risks in ETF portfolios

Having an awareness of typical investment pitfalls may help improve your portfolio’s performance. Avoidable risks include chasing performance, fear of missing out, and focusing on the negatives. History shows investors who overreact to near-term market events typically end up doing worse than if they stuck to their long-term plan. 

It is critical to focus on your time in the market rather than worrying about timing the market. Building a diversified portfolio can smooth the ride, which can help you stay the course even through turbulent markets.

Unavoidable risks in ETF portfolios

Investors should be aware that, like most investments, ETFs are not guaranteed products but are subject to risk of loss. Since there are many different types of ETFs, some funds are riskier than others. For example, in the case of investment in an ETF with securities not listed in the investor’s base currency (e.g. a U.S. equity ETF), fund returns may be affected by exchange rate fluctuations. Many ETFs offer hedging to reduce this risk. 

Examples of risk for bond ETFs include interest rates and credit risk. Typically, when interest rates rise, there is a decline in bond values and credit risk refers to the possibility that the bond issuer will not be able to make the principal and interest payments.

When managing bonds, consider selecting your bond mix based on your larger asset allocation. Generally, the more aggressive the overall portfolio (or the more exposure it has to equities), the more conservative the bonds may need to be. Aggressive portfolios typically need duration and high credit quality to deliver equity diversification. 

Consulting with a financial professional can help you plan to minimise the impact of risks on your portfolio.

Remember that starting early with ETF investing can help you harness the power of compounding returns. To ensure you achieve your financial goals, carefully choose ETF funds to align with your investment objectives. Financial advisers can help discuss any financial challenges or questions you may have before starting an ETF portfolio.

Visit to view a prospectus, which includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Investing involves risk, including possible loss of principal.


iShares High Growth ESG ETF (IGRO): This product is likely to be appropriate for a consumer who is seeking capital growth and/or income distribution, using the product for a whole portfolio solution or less, with a minimum investment timeframe of 5 years, and with a medium to high risk/return profile.

iShares Balanced ESG ETF (IBAL): This product is likely to be appropriate for a consumer who is seeking capital growth, capital preservation and/or income distribution, using the product for a whole portfolio solution or less, with a minimum investment timeframe of 5 years, and with a medium to high risk/return profile.

iShares S&P 500 ETF (IVV): This product is likely to be appropriate for a consumer who is seeking capital growth and/or income distribution, using the product for a core component of their portfolio or less, with a minimum investment timeframe of 5 years, and with a medium to high risk/return profile.

iShares S&P 500 (AUD Hedged) ETF (IHVV): This product is likely to be appropriate for a consumer who is seeking capital growth, using the product for a core component of their portfolio or less, with a minimum investment timeframe of 5 years, and with a high to very high risk/return profile. 

iShares Global Aggregate Bond ESG (AUD Hedged) ETF (AESG): This product is likely to be appropriate for a consumer who is seeking capital preservation and/or income distribution, using the product for a major allocation of their portfolio or less, with a minimum investment timeframe of 5 years, and with a medium risk/return profile. 

iShares Core Cash ETF (BILL): This product is likely to be appropriate for a consumer who is seeking capital preservation and/or income distribution, using the product for a whole portfolio solution or less, with no minimum investment timeframe, and with a very low risk/return profile. 


This information has been provided by BIMAL for WealthHub Securities Limited (WSL) (ABN 83 089 718 249)(AFSL No. 230704). WSL is a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited (ABN 12 004 044 937)(AFSL No. 230686) (NAB). NAB doesn’t guarantee its subsidiaries’ obligations or performance, or the products or services its subsidiaries offer.  This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice.  Past performance is not a reliable indicator of future performance.  Any comments, suggestions or views presented do not reflect the views of WSL and/or NAB.  Subject to any terms implied by law and which cannot be excluded, neither WSL nor NAB shall be liable for any errors, omissions, defects or misrepresentations in the information or general advice including any third party sourced data (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the general advice or information. If any law prohibits the exclusion of such liability, WSL and NAB limit its liability to the re-supply of the information, provided that such limitation is permitted by law and is fair and reasonable. For more information, please click here.


Issued by BlackRock Investment Management (Australia) Limited ABN 13 006 165 975, AFSL 230 523 (BIMAL). 

This material provides general advice only and does not take into account your individual objectives, financial situation, needs or circumstances. Before making any investment decision, you should assess whether the material is appropriate for you and obtain financial advice tailored to you having regard to your individual objectives, financial situation, needs and circumstances. Refer to BIMAL’s Financial Services Guide on its website for more information. This material is not a financial product recommendation or an offer or solicitation with respect to the purchase or sale of any financial product in any jurisdiction.

Information provided is for illustrative and informational purposes and is subject to change. It has not been approved by any regulator.

This material is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. BIMAL is a part of the global BlackRock Group which comprises of financial product issuers and investment managers around the world. BIMAL is the issuer of financial products and acts as an investment manager in Australia.

BIMAL is the responsible entity and issuer of units in the Australian domiciled managed investment schemes referred to in this material, including the Australian domiciled iShares ETFs. Any potential investor should consider the latest product disclosure statement (PDS) before deciding whether to acquire, or continue to hold, an investment in any BlackRock fund. BlackRock has also issued a target market determination (TMD) that describes the class of consumers that comprises the target market for each BlackRock fund and matters relevant to their distribution and review. The PDS and the TMD can be obtained by contacting the BIMAL Client Services Centre on 1300 366 100. In some instances the PDS and the TMD are also available on the BIMAL website at An iShares ETF is not sponsored, endorsed, issued, sold or promoted by the provider of the index which a particular iShares ETF seeks to track. No index provider makes any representation regarding the advisability of investing in the iShares ETFs. Further information on the index providers can be found in the BIMAL website terms and conditions at

BIMAL, its officers, employees and agents believe that the information in this material and the sources on which it is based (which may be sourced from third parties) are correct as at the date of publication. While every care has been taken in the preparation of this material, no warranty of accuracy or reliability is given and no responsibility for the information is accepted by BIMAL, its officers, employees or agents. Except where contrary to law, BIMAL excludes all liability for this information.

Any investment is subject to investment risk, including delays on the payment of withdrawal proceeds and the loss of income or the principal invested. While any forecasts, estimates and opinions in this material are made on a reasonable basis, actual future results and operations may differ materially from the forecasts, estimates and opinions set out in this material. No guarantee as to the repayment of capital or the performance of any product or rate of return referred to in this material is made by BIMAL or any entity in the BlackRock group of companies. 

No part of this material may be reproduced or distributed in any manner without the prior written permission of BIMAL. 

©2024 BlackRock, Inc. or its affiliates. All Rights reserved. BLACKROCK, BLACKROCK SOLUTIONS, ALADDIN, iSHARES and the stylised i logo are registered and unregistered trademarks of BlackRock, Inc. or its affiliates. All other trademarks are those of their respective owners.

About the Author
iShares by BlackRock

iShares unlocks opportunity across markets to meet the evolving needs of investors. With more than twenty years of experience, a global line-up of 1300+ exchange traded funds (ETFs) and $3.21 trillion in assets under management as of June 30, 2023, iShares continues to drive progress for the financial industry. iShares funds are powered by the expert portfolio and risk management of BlackRock.