What is the best ETF to invest in 2023?
The best ETF of 2023 was iShares Expanded Tech Software Sector ETF (IGV), with a YTD return of 355.22%. Technology ETFs outperformed their peers this year, driven by the widespread adoption of AI and expectations of a soft landing in the economy in 2024.
The Fidelity Blue-Chip Growth ETF FBCG has jumped 58.7% in 2023 to become the best-performing U.S. fund, excluding ETNs and leveraged products, according to FactSet data. The WisdomTree U.S. Quality Growth Fund QGRW is up 56.2% this year, while the Invesco QQQ Trust Series I QQQ has risen 55.6% in 2023.
| Symbol | Name | 5-Year Return |
|---|---|---|
| XNTK | SPDR NYSE Technology ETF | 22.09% |
| XHB | SPDR S&P Homebuilders ETF | 22.05% |
| SPUU | Direxion Daily S&P 500 Bull 2x Shares | 21.90% |
| QQQ | Invesco QQQ Trust Series I | 21.45% |
| Exchange-traded fund (ticker) | Assets under management | Yield |
|---|---|---|
| Vanguard Dividend Appreciation ETF (VIG) | $75.6 billion | 1.9% |
| Vanguard U.S. Quality Factor ETF (VFQY) | $298.0 million | 1.4% |
| SPDR Gold MiniShares (GLDM) | $6.1 billion | 0.0% |
| iShares 1-3 Year Treasury Bond ETF (SHY) | $25.3 billion | 4.4% |
| Ticker | Fund name | 5-year return |
|---|---|---|
| SMH | VanEck Semiconductor ETF | 33.26% |
| SOXX | iShares Semiconductor ETF | 30.19% |
| XLK | Technology Select Sector SPDR Fund | 27.00% |
| IYW | iShares U.S. Technology ETF | 26.17% |
| Symbol | Name | Dividend Yield |
|---|---|---|
| CYA | Simplify Tail Risk Strategy ETF | 94.84% |
| TSLY | YieldMax TSLA Option Income Strategy ETF | 88.79% |
| NGE | Global X MSCI Nigeria ETF | 85.38% |
| TSL | GraniteShares 1.25x Long Tesla Daily ETF | 84.91% |
| | Ticker | 10-Year Performance |
|---|---|---|
| 1 | SMH | 986.8% |
| 2 | XLK | 554.3% |
| 3 | IXN | 474.8% |
| 4 | IWY | 377.9% |
| Symbol | Name | Avg Daily Share Volume (3mo) |
|---|---|---|
| QQQ | Invesco QQQ Trust Series I | 44,293,121 |
| XLF | Financial Select Sector SPDR Fund | 42,596,215 |
| IWM | iShares Russell 2000 ETF | 42,464,570 |
| HYG | iShares iBoxx $ High Yield Corporate Bond ETF | 36,928,203 |
- 9 Safest Index Funds and ETFs to buy in 2024. ...
- Vanguard S&P 500 ETF (VOO 0.04%) ...
- Vanguard High Dividend Yield ETF (VYM 0.23%) ...
- Vanguard Real Estate ETF (VNQ -0.05%) ...
- iShares Core S&P Total U.S. Stock Market ETF (ITOT 0.1%) ...
- Consumer Staples Select Sector SPDR Fund (XLP 0.31%) ...
- iShares 0-3 Month Treasury Bond ETF (SGOV 0.03%)
Experts agree that for most personal investors, a portfolio comprising 5 to 10 ETFs is perfect in terms of diversification.
Why not invest in ETF?
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.
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 very good investments. Many ETFs enable you to invest passively in a broader stock market index at a low cost, allowing them to earn market returns. Other ETFs are great options for those seeking passive income from dividend stocks or bonds.
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.
Our pick for the best overall Vanguard ETF is Vanguard Total World Stock ETF. For a 0.07% expense ratio, Vanguard Total World Stock ETF offers a globally diversified exposure across over 9,500 stocks.
- Invesco QQQ Trust (QQQ).
- Vanguard Growth ETF (VUG).
- iShares Russell 1000 Growth ETF (IWF).
- iShares S&P 500 Growth ETF (IVW).
- Schwab U.S. Large-Cap Growth ETF (SCHG).
- SPDR Portfolio S&P 500 Growth ETF (SPYG).
- iShares Core S&P U.S. Growth ETF (IUSG).
In fact, an ETF called the Global X NASDAQ 100 Covered Call ETF (NASDAQ:QYLD), launched in 2013, currently boasts an eye-catching yield of 12%. While the ETF holds appeal for income investors, there are also several things that investors should be aware of before jumping in right after seeing that eye-popping yield.
| Symbol Symbol | ETF Name ETF Name | % In Top 10 % In Top 10 |
|---|---|---|
| VIG | Vanguard Dividend Appreciation ETF | 32.18% |
| VYM | Vanguard High Dividend Yield Index ETF | 25.50% |
| VYMI | Vanguard International High Dividend Yield ETF | 14.60% |
| VIGI | Vanguard International Dividend Appreciation ETF | 35.23% |
Global X Nasdaq-100 Covered Call ETF (QYLD)
Like QQQ, QYLD buys all the stocks in the Nasdaq-100, but the portfolio managers at Global X have developed an innovative strategy to provide shareholders with exceptional dividend income that's paid out monthly.
- SPDR S&P Emerging Markets Dividend ETF (EDIV) – Up 40.9%; Yield 4.26% annually. ...
- WisdomTree Japan Hedged SmallCap Equity Fund (DXJS) – Up 37.9%; Yield 2.71% annually.
Are ETFs good for beginners?
Exchange-traded funds (ETFs) are ideal for beginning investors due to their many benefits, which include low expense ratios, instant diversification, and a multitude of investment choices. Unlike some mutual funds, they also tend to have low investing thresholds, so you don't have to be ultra-rich to get started.
The Vanguard S&P 500 ETF (VOO -0.26%) is one of the most popular investment options for index investors. And with good reason. Its low expense ratio and strong track record of tracking the index make it a great option for those simply looking to match the S&P 500.
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.
| No. | Provider Name | Total Assets |
|---|---|---|
| 1 | BlackRock | 2,647.42B |
| 2 | Vanguard | 2,446.40B |
| 3 | State Street | 1,204.50B |
| 4 | Invesco | 459.20B |
The largest Aggressive ETF is the iShares Core Aggressive Allocation ETF AOA with $1.80B in assets. In the last trailing year, the best-performing Aggressive ETF was AOA at 17.72%. The most recent ETF launched in the Aggressive space was the iShares ESG Aware Aggressive Allocation ETF EAOA on 06/12/20.
