Exchange-traded funds offer investors an attractive alternative to holding individual stocks. With ETFs, investors can own assets that trade like stocks, but give them ownership of a wide variety of stocks.
Exchange-traded fund (ETF)
An exchange-traded fund or ETF allows investors to buy multiple stocks or bonds at once.
There are many typesETFavailable. Some monitor important metrics such asorNasdaq compound.Others offer investors exposure to specific parts of the world, such as China or emerging markets. Meanwhile, some ETFs focus on specific sectors, such as technology or banking.
In tough market conditions like today, ETFs can help eliminate the risk of holding a single stock. This is because they are less volatile than individual stocks. Although, in principle, they look likeinvestment funds, are easier to buy and trade than a typical mutual fund and generally have lower fees.
If you are lookingETFs to invest, keep reading to see the top seven.
The 7 Best ETFs to Buy Now
|ETF||Heart||Assets under management (AUM)||cost factor||Description|
|Vanguard S&P 500 ETF||(NYSEMKT: VOO)||$290.9 billion||0,03%||A fund that tracks the S&P 500.|
|Trusted by Invesco QQQ||(NASDAQ:QQQ)||$170.5 billion||0,2%||A fund that tracks the Nasdaq 100.|
|Vanguard Growth Fund||(NYSEMKT: VUG)||$81.8 billion||0,04%||Invests in US large-cap growth companies.|
|iShares Core S&P Small Cap ETF||(NYSEMKT: IJR)||$66.0 billion||0,06%||A fund that tracks the S&P SmallCap 600 Index.|
|iShares Core Dividend Growth ETF||NYSEMKT: DGRO)||$23.6 billion||0,08%||Investments in US equities focused on increasing dividends.|
|Vanguard Total Stock Market ETF||(NYSEMKT: VTI)||$285.3 billion||0,03%||He maintains approximately 4,000 US inventories of all sizes.|
|iShares Core MSCI Total International Stock ETF||(NASDAQ: IXUS)||$31.6 billion||0,07%||It has approximately 4,300 international stocks of all sizes.|
1. Vanguard 500 index fund
Vanguard createdindex fund. If you are looking for one,Vanguard S&P 500 ETFit's hard to beat.
it's very cheapcost factoronly 0.03%. This compares to the average spend of 0.78% for similar funds. This lower expense ratio means investors will pay just $3 in annual fees for every $10,000 invested in the fund, compared to $78 in a competing fund.
The Vanguard S&P 500 ETF is one of the largest and most popular ETFs (third in the world).assets under managementor AUM). The combination of low cost and large ETF size makes it a great choice if you want to invest in the broader market. Due to its history, diversity and exposure tohigh value stocks, many investors consider it one of the best ETFsbuy and hold.
The S&P 500 has an excellent record of returns for investors. Over the past 50 years,average stock market performanceas measured by the S&P 500 is 9.4%, zdividends are reinvested. The Vanguard S&P 500 ETF is an inexpensive way to capture market returns.
2. Trusted by Invesco QQQ
If you are looking for great exposuretechnological stocks,Trusted by Invesco QQQit is an excellent choice. The ETF tracks the Nasdaq 100 Index, which includes Nasdaq's top 100 non-financial companies.
The most popular stocks in ETFs arelitter(AAPL -0,78%),Microsoft(MSFT -3,09%), EUAmazonas(AMZN -4,25%). It also has a 0.2% affordable rate. It is one of the most successful ETFs of the last decade. Investco QQQ Trust generated a total return of over 400% (17.6% p.a.), handily outperforming the S&P 500 by 220% (12.4% p.a.).
The Nasdaq 100 faced a challengebear marketbeginning in early 2023. However, Invesco QQQ Trust appears well positioned to outperform over the longer term, as many of its larger holdings have outperformed the market.growth stocksthey also tend to grow faster than the general market in the early stages.bull market.
3. ETF Vanguard Growth
Investors in growth stocksthey licked their wounds for most of the last year. This is because rising interest rates limit growth stocks, asOfferdevelopment of financial models.
However, if you are tired of picking winning stocks at a time when so few are profitable, you might want to invest inVanguard Growth Fund, which owns large-cap growth stocks and tracks the CRSP US Large-Cap Growth Index. Like the Invesco QQQ Trust and the Vanguard 500 Index, the largest shareholders in the Vanguard Growth ETF are Apple and Microsoft. In addition, the growth fund owns several other growth stocks among its approximately 240 holdings.
The Vanguard Growth ETF offers a minimum cost fee of just 0.04%. Its low cost makes it a good deal for anyone looking for a growth stock ETF.
4. iShares Core S&P 500 Small Cap ETF
The iShares Core S&P Small-Cap ETF offers broad exposure tosmall cap stocks.Small caps tend to be more volatile than the broader market because they may not be as profitable or as well capitalized asbig headtitles. As a result, small caps are more exposed to risk during recessions, as they may not have the same access to capital.
ETFs help cushion some of that risk by holding a large basket of small caps. As of early 2023, he owns over 600 shares. It has a very low concentration of holdings. Its top 15 entries made up about 7.5% of the total.
The ETF has a very low cost factor, making it an inexpensive way to add exposure to small-cap stocks to your portfolio.
5. ETF iShares Core Dividend Growth
dividendsthey are a great long-term investment. Over the past 50 years, dividend-paying companies have outperformed the broader market (9.2% average annualized return versus 7.7% for the like-weight S&P 500 index). Dividend producers and initiators performed the best (10.2% versus 6.6% for companies that did not change their dividend policy).
The iShares Core Dividend Growth ETF provides exposure to US stocks with a history of dividend growth. As of early 2023, he owns nearly 450 dividend shares.
ETF offers a relatively attractive offerdividend rate.As of early 2023, it has returned 2.4% over 12 months, higher than the S&P 500 index fund's dividend yield of 1.7%. Thanks to the low cost of 0.08%, investors can keep more of themdividend incomethat ETFs produce. In addition, the fund is expected to offer price increases as the underlying companies increase their earnings and increase their dividends.
6. Vanguard Total Stock Market ETF
Although the S&P 500 is considered a broad market index, it gives exposure to only 500 US large caps. If you want to own every single stock on the US market, the best way to do that is with an exchange-traded fund like the Vanguard Total Stock Market ETF. The fund has approximately 4,000 shares, including large cap companies,medium hatsand little hats. As its holdings include the S&P 500, its largest holdings are the same as the broad market index.
The purpose of the Vanguard Total Stock Market ETF is to track the CRSP US Total Stock Market Index. Like other Vanguard mutual funds, it has a low cost fee of 0.03%, making it an affordable way to invest in the US stock market through an ETF.
7. iShares Core MSCI Total International Stock ETF
If you want these to be international markets, the iShares Core MSCI Total International Stock ETF is the way to go. The fund derives its shares from the MSCI global index and then removes the US entries. It owns approximately 4,300 stocks, including large, mid and small caps from around the world.
The ETF offers diversified international exposure. The fund's top five investments as of early 2023 are:
- semiconductor taiwan(TSM 0,47%): A Taiwanese IT company represents 1.5% of the fund's shares.
- Child(OTCMKTS:NSRGY): The Swiss consumer goods company owns 1.2% of the ETF shares.
- Novo Nordisk(ONG -2,01%): A Danish medical company owns 1% of the fund's shares.
- Tencent(OTCMKTS: TCEHY): A Chinese media company owns 1% of the ETF shares.
- LVMH(LVMUY -0,51%): A French consumer company owns 1% of the shares in the ETF.
The fund allows investors to invest globally with an affordable spend ratio of 0.07%. It also has an attractive dividend yield of 2.3% until the beginning of 2023, based on the payment of dividends in the last 12 months.
Related investment issues
Are ETFs right for you?
Exchange-traded funds can work for almost any type of investor, regardless of their investment style or the type of stocks they want to invest in.
Hundreds of ETFs are available that offer exposure to a wide range of sectors, as well as different types of investment objectives, such as dividends or growth. These funds avoid some of the risk and volatility associated with investing in individual stocks at very low cost. It's also a good idea if there's an area you want to invest in, but you don't know it well enough to pick individual stocks.
For most investors, owning at least one or two ETFs makes sense, especially if you want to take some of the work out of picking individual stocks. The above list is a good start if you are looking for some of the best ETFs to buy.
Frequently asked questions about buying ETFs
Can I invest $1,000 in an ETF?
You caninvest $1,000or less in ETFs. In most online brokerage accounts, the investor only needs to buy one share of the ETF (which can cost less than $100 in many cases). Meanwhile, some brokers allow you to buyfractional sharesexchange-traded fund, allowing investors to buy less than a whole share.
What is a good ETF to buy and hold?
There are many good ETFs that you can buy and hold. It's a smart strategy to buy low-cost ETFs that focus on approximating the performance of a stock market index such as the S&P 500. A good choice is the Vanguard S&P 500 ETF.
Are ETFs a good way to start investing?
ETFs are a good way to start investing. They allow anyone to invest in a wide selection of stocks to instantly creatediversified portfolio. Most ETFs charge a reasonable administration fee (expense fee). This makes them excellent and affordable investment instruments for beginners.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, sits on the board of The Motley Fool.Matthew DiLallotem cargos na Amazon.com, Apple e Taiwan Semiconductor Manufacturing. O Motley Fool posiciona e recomenda Amazon.com, Apple, Microsoft, Taiwan Semiconductor Manufacturing, Vanguard Index Funds - Vanguard Growth ETF, Vanguard Index Funds - Vanguard Total Stock Market ETF, Vanguard S&P 500 ETF e iShares Trust - iShares Core S&P Small - Cap ETF. O Motley Fool recomenda Novo Nordisk. Motley Fool tem umdisclosure policy.
What is an inverse ETF? An inverse ETF is set up so that its price rises (or falls) when the price of its target asset falls (or rises). This means the ETF performs inversely to the asset it's tracking. For example, an inverse ETF may be based on the S&P 500 index.What's the best ETF to buy right now? ›
|ETF||YTD performance as of June 2|
|Ark Innovation ETF (ARKK)||33.2%|
|Global X MSCI Greece ETF (GREK)||28.8%|
|Pimco Enhanced Short Maturity Active ETF (MINT)||2.5%|
|iShares Gold Trust (IAU)||6.8%|
|TQQQ||ProShares UltraPro QQQ||19.49%|
|XLK||Technology Select Sector SPDR Fund||19.47%|
|VGT||Vanguard Information Technology ETF||18.68%|
|PSI||Invesco Dynamic Semiconductors ETF||18.56%|
|Fund (ticker)||Expense ratio||10-year return as of March 31|
|Invesco QQQ Trust (QQQ)||0.20%||17.70%|
|Vanguard Growth ETF (VUG)||0.04%||13.61%|
|iShares Russell 1000 Growth ETF (IWF)||0.18%||14.38%|
|iShares S&P 500 Growth ETF (IVW)||0.18%||13.42%|
What is an inverse ETF? An inverse ETF is set up so that its price rises (or falls) when the price of its target asset falls (or rises). This means the ETF performs inversely to the asset it's tracking. For example, an inverse ETF may be based on the S&P 500 index.What is the #1 safest investment? ›
What are the safest types of investments? U.S. Treasury securities, money market mutual funds and high-yield savings accounts are considered by most experts to be the safest types of investments available.What ETFs do well in high inflation? ›
10-Year Average Annualized Return. We believe the SPDR SSGA Multi-Asset Real Return ETF might be the best inflation ETF. This actively managed fund holds shares of other ETFs that track market sectors expected to outperform the inflation rate.Which investment has the highest average rate of return? ›
Stocks offer the biggest potential return on your investment while exposing your money to the highest level of volatility.
|1.||Raj Rayon Inds.||60.30|
|Symbol Symbol||ETF Name ETF Name||ESG Score Global Percentile (%) ESG Score Global Percentile (%)|
|VUG||Vanguard Growth ETF||60.45%|
|IWF||iShares Russell 1000 Growth ETF||68.15%|
|VGT||Vanguard Information Technology ETF||82.69%|
|XLK||Technology Select Sector SPDR Fund||88.82%|
- ongoing charges.
- fund size.
- fund age.
- performance and tracking difference.
- trading costs.
- tax status.
Aside from analysts' consensus, QQQ is a Buy based on the technical indicators.What ETF mirrors the S&P 500? ›
SPDR S&P 500 ETF (SPY)
The State Street SPDR S&P 500 ETF is not only the oldest U.S. listed exchange-traded fund, but it also typically has both the largest assets under management (AUM) and highest trading volume of all ETFs. This alone makes the SPY the mother of all S&P 500 ETFs.
You only need one S&P 500 ETF
You could be tempted to buy all three ETFs, but just one will do the trick. You won't get any additional diversification benefits (meaning the mix of various assets) because all three funds track the same 500 companies.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.What is the best day and time to buy ETFs? ›
So when is the ideal time? "Middle of the day is generally best, and if there are international (European) securities in the ETF, trading in the morning will ensure you get prices closest to fair value," Nadig explains. Now that you know what time of day is best, let's look at what kind of order you're planning on.What is the best time of the month to buy ETFs? ›
Stock prices tend to fall in the middle of the month. So a trader might benefit from timing stock buys near a month's midpoint—the 10th to the 15th, for example. The best day to sell stocks would probably be within the five days around the turn of the month.What time of year is best to invest in ETF? ›
"Around September or October, the investor can buy the major market index ETFs: SPDR Dow Jones industrial average ETF (ticker: DIA), SPDR S&P 500 (SPY), PowerShares QQQ (QQQ) and iShares Russell 2000 (IWM). And then sell them around the April to May time frame, especially after a nice run-up," Hirsch says.What is the safest investment with highest return in USA? ›
- High-yield savings accounts.
- Series I savings bonds.
- Short-term certificates of deposit.
- Money market funds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
- Eliminating credit card debt. Did you know that credit card companies can charge interest rates as high as 29.99%? ...
- Paying your bills on time. We have covered the topic of late fees in the past. ...
- Refinancing a high interest rate auto loan.
- Take Advantage of 401(k) Matching.
- Invest in Value and Growth Stocks.
- Increase Your Contributions.
- Consider Alternative Investments.
- Be Patient.
Dividend ETFs typically track the performance of a dividend index consisting of dividend-paying stocks of companies that pay high or stable and growing dividends. Dividend ETFs and other value-oriented ETFs generally outperform growth stocks during periods of high inflation, especially in the short term.What fund to beat inflation? ›
Investing in energy is historically one of the best ways to protect against high inflation. High energy prices and the war in Ukraine have made renewable energy assets even more valuable. They benefit from higher power prices, but subsidy elements are also inflation-linked.Which stock perform best during inflation? ›
|Stock||Implied upside over May 9 closing price|
|APA Corp. (APA)||80.9%|
|Applied Materials Inc. (AMAT)||31.8%|
|Halliburton Co. (HAL)||49.5%|
|Advanced Micro Devices Inc. (AMD)||3.1%|
Most of our experts agree that one of the safest places to keep your money is in a savings account insured by the Federal Deposit Insurance Corporation (FDIC). “High-yield savings accounts are an excellent option for those looking to keep their retirement savings safe.How do I get 10 percent interest on my money? ›
- Invest in stock for the long haul. ...
- Invest in stocks for the short term. ...
- Real estate. ...
- Investing in fine art. ...
- Starting your own business. ...
- Investing in wine. ...
- Peer-to-peer lending. ...
- Invest in REITs.
- How to Get 10% Return on Investment: 10 Proven Ways.
- High-End Art (on Masterworks)
- Paying Down High-Interest Loans.
- U.S. Government I-Bonds.
- Stock Market Investing via Index Funds.
- Stock Picking.
- Junk Bonds.
- Buy an Existing Business.
- Coca-Cola. (NASDAQ: KO) ...
- Altria. (NASDAQ: MO) ...
- Amazon.com. (NASDAQ: AMZN) ...
- Celgene. (NASDAQ: CELG) ...
- Apple. (NASDAQ: AAPL) ...
- Alphabet. (NASDAQ:GOOG) ...
- Gilead Sciences. (NASDAQ: GILD) ...
- Microsoft. (NASDAQ: MSFT)
|Growth stock||Year-to-date return (as of May 10 close)|
|Apple Inc. (ticker: AAPL)||33.8%|
|DexCom Inc. (DXCM)||8.2%|
|Fortinet Inc. (FTNT)||37.1%|
|Tesla Inc. (TSLA)||36.8%|
- Brightcom Group. 23.65. 3.48. 4772.39. 1.27. 229.15. 2.73. 1367.92. 10.28. 30.91. 1370.99. 44.18.
- Easy Trip Plann. 43.10. 51.03. 7492.16. 0.15. 37.81. 58.07. 111.47. 88.42. 54.57. 146.82. 39.17.
- Primo Chemicals. 64.80. 11.72. 1570.38. 0.00. 17.47. -58.55. 147.80. -8.24. 43.90. 133.98. 121.93.
|Symbol Symbol||ETF Name ETF Name||ER ER|
|USMV||iShares MSCI USA Min Vol Factor ETF||0.15%|
|JPST||JPMorgan Ultra-Short Income ETF||0.18%|
|SPLV||Invesco S&P 500® Low Volatility ETF||0.25%|
|EFAV||iShares MSCI EAFE Min Vol Factor ETF||0.32%|
|Symbol||Name||Avg Daily Share Volume (3mo)|
|TQQQ||ProShares UltraPro QQQ||135,520,859|
|SQQQ||ProShares UltraPro Short QQQ||129,627,039|
|SPY||SPDR S&P 500 ETF Trust||87,604,742|
|SOXL||Direxion Daily Semiconductor Bull 3x Shares||72,650,211|
|Symbol||Name||Avg Daily Share Volume (3mo)|
|SPY||SPDR S&P 500 ETF Trust||87,604,742|
|IVV||iShares Core S&P 500 ETF||3,978,708|
|VOO||Vanguard S&P 500 ETF||3,690,368|
|VTI||Vanguard Total Stock Market ETF||2,753,517|
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.How much should I start with an ETF? ›
There is no minimum amount required to begin investing in ETFs. All you need is enough to cover the price of one share and any associated commissions or fees.What ETFs should be in your portfolio? ›
|Fund Name||Ticker||Annualized 5-Year Total Return %|
|iShares Core S&P Total US Stock Mkt ETF||ITOT||8.65|
|Schwab US Broad Market ETF™||SCHB||8.70|
|Schwab US Large-Cap ETF™||SCHX||9.14|
|SPDR® Port S&P 1500 Comps Stk Mkt ETF||SPTM||9.22|
The QQQ ETF offers buy-and-hold investors low expenses and long-term growth potential with enough diversification to avoid the risks of betting on one company. On the downside, long-term investors in QQQ must deal with sector risk, possible overvaluation, and the absence of small caps.Which is better QQQ or QQQ? ›
The QQQM is functionally the same as the QQQ ETF, except it charges a slightly lower management fee offset by lower liquidity. For most investors, it is worthwhile to switch from QQQ to QQQM.Should I buy QQQ or TQQQ? ›
However, because of the structure of leveraged ETFs, the recommended holding period is from intraday to only a few days. Moreover, if the index drops, the TQQQ will lose 3x as much as the QQQ. Therefore, TQQQ may be better suited for day traders or swing traders.
Invest Across Asset Classes
Investing only in the S&P 500 limits your portfolio to stocks, which can be a risky decision during major market crashes. Holding bonds, cash, real estate, and other assets can help to limit your risk during these periods.
Fidelity Investment's flagship FXAIX fund remains one of the most popular S&P 500 index funds among U.S. investors, and for good reason. With a 0.015% expense ratio, or just $1.50 in fees for a $10,000 investment, this fund offers extraordinary value.Which ETF has the most exposure to Netflix? ›
|Ticker Ticker||ETF ETF||Weighting Weighting|
|QQQA||ProShares Nasdaq-100 Dorsey Wright Momentum ETF||4.98%|
|FDN||First Trust Dow Jones Internet Index Fund||4.85%|
|XLC||Communication Services Select Sector SPDR Fund||4.69%|
|OND||ProShares On-Demand ETF||4.69%|
If you hold ETF shares for one year or less, then gain is short-term capital gain. If you hold ETF shares for more than one year, then gain is long-term capital gain.
The best time to buy ETFs is at regular intervals throughout your lifetime. ETFs are like savings accounts from back when savings accounts actually paid you interest. Think back to a time when you (or your parents!) used to invest in your future by putting money into a savings account.Should I invest everything in ETFs? ›
If you're looking for an easy solution to investing, ETFs can be an excellent choice. ETFs typically offer a diversified allocation to whatever you're investing in (stocks, bonds or both). You want to beat most investors, even the pros, with little effort.Is it safe to put all your money in an ETF? ›
ETFs are for the most part safe from counterparty risk. Although scaremongers like to raise fears about securities-lending activity inside ETFs, it's mostly bunk: Securities-lending programs are usually over-collateralized and extremely safe. The one place where counterparty risk matters a lot is with ETNs.Should I put most of my money in ETFs? ›
Should you invest in ETFs? Since ETFs offer built-in diversification and don't require large amounts of capital in order to invest in a range of stocks, they are a good way to get started. You can trade them like stocks while also enjoying a diversified portfolio.What is a good balanced portfolio? ›
A balanced portfolio invests in both stocks and bonds to reduce potential volatility. An investor seeking a balanced portfolio is comfortable tolerating short-term price fluctuations, is willing to tolerate moderate growth, and has a mid- to long-range investment time horizon.Is Vanguard S&P 500 ETF a good investment? ›
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.
ETFs are considered to be low-risk investments because they are low-cost and hold a basket of stocks or other securities, increasing diversification. For most individual investors, ETFs represent an ideal type of asset with which to build a diversified portfolio.Should I invest in 1 ETF? ›
Holding too many ETFs in your portfolio introduces inefficiencies that in the long term will have a detrimental impact on the risk/reward profile of your portfolio. For most personal investors, an optimal number of ETFs to hold would be 5 to 10 across asset classes, geographies, and other characteristics.What is Vanguard's best performing ETF? ›
- Vanguard Total Stock Market ETF (VTI)
- Vanguard Total International Stock ETF (VXUS)
- Vanguard Information Technology ETF (VGT)
- Vanguard Total Bond Market ETF (BND)
- Vanguard Emerging Markets Government Bond ETF (VWOB)
- Vanguard ESG US Stock ETF (ESGV)
- Vanguard Russell 1000 Growth ETF (VONG)
|Market Return % (as of 05/31/2023)||NAV Return % (as of 03/31/2023)|
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.
- Disadvantages of ETFs. ETF trading comes with some drawbacks, which include the following:
- Trading fees. ...
- Operating expenses. ...
- Low trading volume. ...
- Tracking errors. ...
- Potentially less diversification. ...
- Hidden risks. ...
- Lack of liquidity.
ETFs can provide an easy way to be diversified and as such, the investor may want to have 75% or more of the portfolio in ETFs." To that end, Conzo says a more sophisticated investor may have additional needs.How much of my money should I invest in ETF? ›
You expose your portfolio to much higher risk with sector ETFs, so you should use them sparingly, but investing 5% to 10% of your total portfolio assets may be appropriate. If you want to be highly conservative, don't use these at all.What is the most popular ETF? ›
Two of the most popular ETFs include index funds based on the Standard & Poor's 500 index and the Nasdaq 100 index, which contain high-quality businesses listed on American exchanges: Vanguard S&P 500 ETF (VOO), with an expense ratio of 0.03 percent. Invesco QQQ Trust (QQQ), with an expense ratio of 0.20 percent.