What is the best ETF to invest in right now?
ETFs provide several benefits to investors, including the ability to buy multiple assets in one fund, the risk-reducing benefits of diversification and the generally low costs to manage the fund. The cheapest funds are generally passively managed and may cost just a few dollars annually for every $10,000 invested.
| Exchange-traded fund (ticker) | Assets under management | Expenses |
|---|---|---|
| Vanguard Dividend Appreciation ETF (VIG) | $78.2 billion | 0.06% |
| Vanguard U.S. Quality Factor ETF (VFQY) | $324.3 million | 0.13% |
| SPDR Gold MiniShares (GLDM) | $6.8 billion | 0.10% |
| iShares 1-3 Year Treasury Bond ETF (SHY) | $24.8 billion | 0.15% |
| Symbol | Name | 5-Year Return |
|---|---|---|
| IUS | Invesco RAFI Strategic US ETF | 14.75% |
| OEF | iShares S&P 100 ETF | 14.73% |
| SPHB | Invesco S&P 500® High Beta ETF | 14.58% |
| SPYG | SPDR Portfolio S&P 500 Growth ETF | 14.40% |
ETFs provide several benefits to investors, including the ability to buy multiple assets in one fund, the risk-reducing benefits of diversification and the generally low costs to manage the fund. The cheapest funds are generally passively managed and may cost just a few dollars annually for every $10,000 invested.
| FUND(TICKER) | EXPENSE RATIO | 10-YEAR RETURN AS OF APRIL 1 |
|---|---|---|
| iShares Russell 1000 Growth ETF (IWF) | 0.19% | 15.78% |
| iShares S&P 500 Growth ETF (IVW) | 0.18% | 14.34% |
| Schwab U.S. Large-Cap Growth ETF (SCHG) | 0.04% | 15.95% |
| SPDR Portfolio S&P 500 Growth ETF (SPYG) | 0.04% | 14.45% |
- Vanguard S&P 500 ETF (VOO -0.84%) ...
- Vanguard High Dividend Yield ETF (VYM 0.84%) ...
- Vanguard Real Estate ETF (VNQ 0.48%) ...
- iShares Core S&P Total U.S. Stock Market ETF (ITOT -0.78%) ...
- Consumer Staples Select Sector SPDR Fund (XLP 0.98%)
| Symbol | Name | AUM |
|---|---|---|
| SPY | SPDR S&P 500 ETF Trust | $498,344,000.00 |
| IVV | iShares Core S&P 500 ETF | $432,845,000.00 |
| VOO | Vanguard S&P 500 ETF | $423,703,000.00 |
| VTI | Vanguard Total Stock Market ETF | $372,782,000.00 |
| ETF | Assets Under Management | Expense Ratio |
|---|---|---|
| Vanguard Information Technology ETF (VGT) | $70 billion | 0.10% |
| VanEck Semiconductor ETF (SMH) | $16.3 billion | 0.35% |
| Invesco S&P MidCap Momentum ETF (XMMO) | $1.6 billion | 0.34% |
| SPDR S&P Homebuilders ETF (XHB) | $1.8 billion | 0.35% |
| Symbol | Name | Dividend Yield |
|---|---|---|
| PEX | ProShares Global Listed Private Equity ETF | 12.14% |
| SPYI | NEOS S&P 500 High Income ETF | 12.10% |
| BTF | Valkyrie Bitcoin and Ether Strategy ETF | 12.08% |
| SDIV | Global X SuperDividend ETF | 12.06% |
Market risk
The single biggest risk in ETFs is market risk. Like a mutual fund or a closed-end fund, ETFs are only an investment vehicle—a wrapper for their underlying investment. So if you buy an S&P 500 ETF and the S&P 500 goes down 50%, nothing about how cheap, tax efficient, or transparent an ETF is will help you.
What is the downside of ETFs?
For instance, some ETFs may come with fees, others might stray from the value of the underlying asset, ETFs are not always optimized for taxes, and of course — like any investment — ETFs also come with risk.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.
Vanguard S&P 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOO is a great option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market.
| Symbol | Vol * Price | Price |
|---|---|---|
| QQQ D | 31.195 B USD | 414.65 USD |
| IWM D | 8.24 B USD | 193.14 USD |
| TQQQ D | 6.205 B USD | 49.48 USD |
| VOO D | 4.454 B USD | 455.10 USD |
| Ticker | Fund | 10-Yr Return |
|---|---|---|
| VGT | Vanguard Information Technology ETF | 19.60% |
| IYW | iShares U.S. Technology ETF | 19.58% |
| IXN | iShares Global Tech ETF | 18.20% |
| IGM | iShares Expanded Tech Sector ETF | 17.95% |
The majority of individual investors should, however, seek to hold 5 to 10 ETFs that are diverse in terms of asset classes, regions, and other factors. Investors can diversify their investment portfolio across several industries and asset classes while maintaining simplicity by buying 5 to 10 ETFs.
Mutual funds and ETFs may hold stocks, bonds, or commodities. Both can track indexes, but ETFs tend to be more cost-effective and liquid since they trade on exchanges like shares of stock. Mutual funds can offer active management and greater regulatory oversight at a higher cost and only allow transactions once daily.
ETFs can be safe investments if used correctly, offering diversification and flexibility. Indexed ETFs, tracking specific indexes like the S&P 500, are generally safe and tend to gain value over time. Leveraged ETFs can be used to amplify returns, but they can be riskier due to increased volatility.
Are ETFs Safer Than Stocks? ETFs are baskets of stocks or securities, but although this means that they are generally well diversified, some ETFs invest in very risky sectors or employ higher-risk strategies, such as leverage.
The S&P 500's track record is impressive, but the Vanguard Growth ETF has outperformed it. The Vanguard Growth ETF leans heavily toward tech businesses that exhibit faster revenue and earnings gains. No matter what investments you choose, it's always smart to keep a long-term mindset.
What is the best ETF for long term growth?
- Vanguard S&P 500 ETF (VOO)
- Schwab U.S. Small-Cap ETF (SCHA)
- Invesco QQQ Trust (QQQ)
- Vanguard High Dividend Yield Index ETF (VYM)
- Vanguard Total International Stock ETF (VXUS)
- Vanguard Total World Stock ETF (VT)
- iShares Core U.S. Aggregate Bond ETF (AGG)
One of the ways that investors make money from exchange traded funds (ETFs) is through dividends that are paid to the ETF issuer and then paid on to their investors in proportion to the number of shares each holds.
| Ticker | Fund name | 5-year return |
|---|---|---|
| SOXX | iShares Semiconductor ETF | 30.70% |
| XLK | Technology Select Sector SPDR Fund | 24.57% |
| IYW | iShares U.S. Technology ETF | 24.09% |
| FTEC | Fidelity MSCI Information Technology Index ETF | 22.79% |
One metric that investors often look to is trailing one-month performance. The top ETFs for equities, bonds, fixed income, commodities, and currencies for April 2024 based on this metric include CRPT, FCVT, EMHY, DBA, and UUP.
Ultimately, investors choosing an ETF need to ask 3 questions: What exposure does this ETF have? How well does the ETF deliver this exposure? And how efficiently can I access the ETF? Look at the ETF's underlying index (benchmark) to determine the exposure you're getting.
