An exchange traded fund (ETF) is a basket of securities, such as stocks, bonds, and mutual funds, that can be sold on an exchange. If you have little to no experience in the stock market, ETFs are probably your best investing option. Basically, when you decide to buy a share of an ETF, you’ll be investing in a dossier in the hold of several stocks, which is much safer than playing individually in the market. In the US, there are more than 1,700 ETFs today, so it can be hard to decide which one to choose. Take a look at some of the safest and best options in the market.
1. Vanguard Value ETF (VTV)
Billionaire and business mogul Warren Buffet famously made his fortune by seeking out good and stable companies while trading below market value. He proved to the world that there is no need to invest in overly glamorous companies to make money since diversification and safety can also work. The reason why VTV is a good option is that it doesn’t include big names and “hot” stocks, it does instead automate the process of seeking investment bargains. This ETF tracks cheap stocks of sound and stable companies, by inspecting dividend yield, price-box, price-earnings, and price-sales. Their one-year return is estimated at 13.6%.
2. Vanguard High Dividend Yield ETF (VYM)
VYM was founded in 2006 and is comprised of more than 400 holdings. These holdings mostly include US stocks with some of the highest dividend yields. VYM is considered a passive index fund since it passes on individual winners in the stock market, and instead focuses on whole groups of investments. Until recently, the ETF charged $6 for every $10,000 invested. Their portfolio includes vast corporations of the likes of Intel and Johnson & Johnson, and they have an annual return of 10%.
3. Fidelity Quality Factor ETF (FQAL)
FQAL is one of the big ones in the market. FQAL is made for investors who are looking to reduce risk and gain some more security in their investments. The ETF has a return of 17.7% per year and invests some 80% of its assets in the Fidelity U.S. Quality Factor IndexSM. This means that FQAL is outlined to reflect the performance of stocks coming from pretty large and mid-capitalization companies in the US. These companies typically have a higher quality profile in comparison to the wider market.
4. Vanguard Health Care ETF (VHT)
VHT is a fund that is particularly focused on the healthcare sector, which in spite of the current times, remains one of the most consistent markets in the past couple of decades. VHT charges $10 for every $10,000 invested and has fairly stable liquidity. Investors are exposed to more than 300 stocks from companies working in several areas of the healthcare sector while protecting investors from any sort of risk or negative performance from a specific company. The latest annual return for VHT is 20%.
5. Vanguard S&P 500 ETF (VOO)
Many financial experts would argue that if you’re looking to invest in an ETF, it’s better to seek one that tracks the S&P 500 index. This index is broadly seen as the best indicator of large-cap US equities. Amongst all ETFs, VOO is probably one of the best ones when it comes to expense ratios, with a rock-bottom ratio of merely 0.04 percent. This means that the rate was recently going at $4 per year for every $10,000 invested. The annual return for the fund is going at 17.9%, making it one of the largest and safest ETF options to invest in.