9 Best ETFs to Invest In | Top Performing ETFs
We have come a long way since Exchange-Traded Funds (ETFs) entered the marketplace, and there are now over one thousand options to choose from.
This article presents the top 9 best performing ETFs to invest in.
ETFs are essentially mutual funds that can be purchased, sold or traded like stocks. As such, they are highly liquid financial instruments.
Many ETFs epitomize diversification so they are considered safer investments. Historically, they have provided greater returns than bonds or traditional savings accounts.
Sifting through the seemingly endless options of ETFs can be a daunting task, but there are some winners that stand out. After applying various criteria (liquidity factors, overall costs, and underlying holdings) we narrowed the list down to the below 9 best ETFs to invest in.
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List of Top 9 Best ETFs to Add to your Portfolio
- Vanguard Total Stock ETF
- Schwab U.S. Large-Cap ETF
- Schwab U.S. Dividend Equity ETF
- Vanguard Emerging Markets ETF
- Schwab U.S. Small-Cap
- Vanguard Small-Cap Growth
- Technology Select Sector SPDR Fund
- Vanguard Healthcare Index Fund
- SPDR S&P Gas & Oil Expl & Prod
What do ETF Investors Generally Consider? (Key Selection Criteria)
There are many factors that you can consider when choosing the best ETFs to invest in.
When researching the various ETFs to find the top performers, traders and investors alike generally consider the below key variables:
Liquidity:
The liquidity of an ETF tells you how easy it is to buy or sell at any given time. This is an important factor because the inability to buy or sell easily can drastically affect the price of the ETF, which could lead to your paying more than you should to purchase the ETF or be forced to sell it for cheaper than you should.
The more liquid a fund is, the better. Some funds barely trade at all, while others trade over a million times a day.
Cost:
Cost matters more with ETFs than any other investment vehicle. Money managers charge fees to manage these funds, and these fees impact the bid/ask price of the ETF. The lower the cost charged to manage an ETF, the more valuable the ETF is to the investor (higher price). The lowest cost ETF on our list has an expense ratio of 0.04%, which is exceptionally low.
Some actively managed funds can have expense ratios well over 1%, which can seriously eat away at your ROI (Return on Investment).
Underlying Index:
The underlying index tells you what stocks or bonds the ETF is invested in, which determines how diversified the ETF is. The more diversified an ETF investment, the safer (or less risky) it is.
The more concentrated it is, the riskier it is (which could mean a greater potential payoff or loss).
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Industry-specific ETFs vs. Well-diversified ETFs
The below list includes both broad, well-diversified ETFs, as well as industry-specific ETFs.
Industry-specific ETFs are made of a collection of different stocks, but all from the same industry or niche category.
It is important to know that industry-specific ETFs are generally riskier investments, but could also offer more of a return.
Depending on your investment needs, you will want to give extra consideration to an industry-specific ETF. They are a great addition to a larger portfolio, but might not be the best choice for an entire 401K.
The industry-specific ETFs listed here are all on the larger side, so they are less risky than some of their direct competitors.
Comparison Ranking of the Top Performing ETFs
|
ETF |
Underlying Index |
Expense Ratio (Cost) |
Average Trading |
|
Vanguard Total Stock ETF (VTI) |
Overall stock market |
0.06% |
2,763,084 |
|
Schwab U.S. Large-Cap ETF (SCHX) |
Large-cap fund; includes about 85% of market |
0.04% |
326,432 |
|
Schwab U.S. Dividend Equity ETF (SCHD) |
High consistently paying dividend yielding stocks |
0.07% |
372,826 |
|
Vanguard Emerging Markets ETF (VWO) |
FTSE Emerging Index |
0.18% |
18,903,119 |
|
Schwab U.S. Small-Cap (SCHA) |
Dow Jones U.S. Small-Cap Total Stock Market Index |
0.08% |
238,980 |
|
Vanguard Small-Cap Growth (VBK) |
CRSP US Small Cap Growth Index |
0.15% |
172,209 |
|
Technology Select Sector SPDR Fund (XLK) |
All companies in the technology sector |
0.21% |
6,816,152 |
|
Vanguard Healthcare Index Fund (VHT) |
All companies in the healthcare sector |
0.14% |
147,767 |
|
SPDR S&P Gas & Oil Expl & Prod (XOP) |
S&P Oil & Gas Exploration & Production Select Industry Index |
0.35% |
5,776,772 |
Data is subject to charge. Please check individual funds' website for most accurate information
Top 9 Best Performing ETFs – Brief Overview
Vanguard Total Stock ETF (VTI): There are a wide range of funds that allow you to invest across all stocks. One of the cheapest on the market with a track record for success is the Vanguard Total Stock ETF.
Schwabb U.S. Large-Cap Fund ETF (SCHX): Having the lowest cost of all ETFs on this list, the Schwabb U.S. Large-Cap Fund includes large cap stocks from the largest U.S. companies (Apple, Exxon Mobil, Google, etc.).
Schwab U.S. Dividend Equity ETF (SCHD): This funds predominately invests in large cap dividend paying companies…
Vanguard Emerging Markets Fund ETF (VWO): If you are looking to buy an ETF that you plan to sell within the next year, then this may not be your best bet…
Schwab U.S. Small-Cap ETF (SCHA): Schwab’s U.S. Small-Cap ETF invests primarily in small U.S. companies.
Vanguard Small-Cap Growth ETF (VBK): What differentiates Vanguard Small-Cap Growth (VBK) fund from the Schwab U.S. Small-Cap Fund is the focus on growth in small companies.
Technology Select Sector SPDR Fund (XLK): With companies like Apple, Google, and Microsoft leading the way, this fund invests..
Vanguard Healthcare Index Fund (VHT): The Vanguard Healthcare Index Fund focuses on the healthcare industry as a whole and includes stocks from every publicly traded company that finds itself as part of the healthcare industry.
SPDR S&P Oil & Gas Exploration & Prod (XOP): The SPDR S&P Oil & Gas Expl & Prod (XOP) ETF is an industry-specific fund that shows lots of promise.
Conclusion
ETF investments provide an amazing option for any type of investor.
Whether you are just getting your feet wet, looking for a safe investment for your 401K, or wanting to build up a portfolio with industry-specific holdings, there is a top ETF for you.
Before making a decision you should consider the major factors to increase your chances of picking the best ETF for your needs.
