What's the best ETF to buy right now?
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Schemes | Latest Price | Returns in % (as on Apr 26, 2024) |
---|---|---|
ICICI Prudential Nifty 100 ETF | 253.21 | 33.21 |
SBI - ETF BSE 100 | 254.35 | 32.73 |
SBI - ETF Nifty 50 | 235.87 | 28.31 |
Bandhan Nifty 50 ETF ETF | 241.90 | 28.27 |
Symbol | Name | 5-Year Return |
---|---|---|
XNTK | SPDR NYSE Technology ETF | 18.58% |
UPRO | ProShares UltraPro S&P500 | 18.52% |
PTF | Invesco Dorsey Wright Technology Momentum ETF | 18.33% |
QQQ | Invesco QQQ Trust Series I | 18.27% |
The Motley Fool has positions in and recommends Berkshire Hathaway, Nvidia, Realty Income, Vanguard S&P 500 ETF, Vanguard Specialized Funds-Vanguard Real Estate ETF, and Walt Disney.
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.
If you're interested in investing in an ETF and have $1,000 that you can spare to invest -- meaning you already have an emergency fund saved and have paid down any high-interest debt -- the Vanguard S&P 500 ETF (NYSEMKT: VOO) is a great option.
Symbol | Name | Avg Daily Share Volume (3mo) |
---|---|---|
SPY | SPDR S&P 500 ETF Trust | 72,925,680 |
SOXL | Direxion Daily Semiconductor Bull 3x Shares | 71,446,938 |
XLF | Financial Select Sector SPDR Fund | 47,395,488 |
QQQ | Invesco QQQ Trust Series I | 45,988,840 |
ETFs offer advantages over stocks in two situations. First, when the return from stocks in the sector has a narrow dispersion around the mean, an ETF might be the best choice. Second, if you are unable to gain an advantage through knowledge of the company, an ETF is your best choice.
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.
That makes outperforming the S&P 500 on a consistent basis no small task. The one fund that has beaten the index in nine of the past 10 years is the Technology Select Sector SPDR Fund (NYSEMKT: XLK).
What is the downside to an ETF?
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.
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 for beginners
One way for beginner investors to get started is to buy ETFs that track broad market indexes, such as the S&P 500. In doing so, you're investing in some of the largest companies in the country, with the goal of long-term returns.
Interest rate changes are the primary culprit when bond exchange-traded funds (ETFs) lose value. As interest rates rise, the prices of existing bonds fall, which impacts the value of the ETFs holding these assets.
Ticker | Fund | 10-Yr Return |
---|---|---|
SMH | VanEck Semiconductor ETF | 24.37% |
SOXX | iShares Semiconductor ETF | 23.62% |
PSI | Invesco Dynamic Semiconductors ETF | 23.59% |
XSD | SPDR S&P Semiconductor ETF | 21.88% |
For most standard, unleveraged ETFs that track an index, the maximum you can theoretically lose is the amount you invested, driving your investment value to zero. However, it's rare for broad-market ETFs to go to zero unless the entire market or sector it tracks collapses entirely.
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.
You can put $500 in a stock ETF and $500 in a bond ETF to achieve a diversified two-asset-class portfolio which, though simple, can be a great start toward building a portfolio appropriate for your goals. ETFs can be a simple way to build incrementally toward your long-term plan.
ETFs don't have minimum investment requirements -- at least not in the same sense that mutual funds do. However, ETFs trade on a per-share basis, so unless your broker offers the ability to buy fractional shares of stock, you'll need at least the current price of one share to get started.
Ticker | Fund | AUM |
---|---|---|
SPY | SPDR S&P 500 ETF Trust | $363.23B |
IVV | iShares Core S&P 500 ETF | $300.18B |
VTI | Vanguard Total Stock Market ETF | $288.78B |
VOO | Vanguard S&P 500 ETF | $286.59B |
What is the fastest growing ETF?
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% |
Ticker | Company | Performance (Year) |
---|---|---|
VGT | Vanguard Information Technology ETF | 30.75% |
VFMO | Vanguard U.S. Momentum Factor ETF | 27.30% |
VOOG | Vanguard S&P 500 Growth ETF | 26.64% |
MGC | Vanguard Mega Cap 300 Index ETF | 25.51% |
Generally speaking, the best time to trade ETFs is closer to the middle of the trading day rather than the beginning or end.
The low investment threshold for most ETFs makes it easy for a beginner to implement a basic asset allocation strategy that matches their investment time horizon and risk tolerance. For example, young investors might be 100% invested in equity ETFs when they are in their 20s.
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% |