These ETFs are widely held.
Investments come in all sizes, but the biggest and most widely held assets on Wall Street are popular for a reason, offering strategies and exposures that are in high demand among a large group of investors. While every portfolio is unique, often that is a function of asset allocation. In other words, you don’t necessarily need a sophisticated investment different than your neighbor, just more or less money put toward the popular instruments based on your personal financial goals. As a result, these 10 largest exchange-traded funds — all of which command more than $50 billion in assets — have a purpose in almost every long-term portfolio.
SPDR S&P 500 ETF (ticker: SPY)
SPY boasts almost $250 billion assets under management. That’s more than the market capitalization all but about 15 of the very largest public corporations, making this ETF larger than blue-chip stocks like Verizon Communications (VZ) or Wells Fargo & Co. (WFC). Benchmarked to the S&P 500 index, the fund has achieved popularity as a simple and cost-effective way to invest across the largest and most meaningful U.S. stocks. SPY is not the only way to play this index, but thanks to its inception in 1993 it remains the dominant one. And with an expense ratio of 0.09 percent, or $9 annually on every $10,000 invested, it remains among the most affordable, too.
iShares core S&P 500 ETF (IVV)
The IVV is smaller than SPY by assets, but it is the second largest U.S. listed ETF by assets across all strategies. The fund is equal in many ways to the SPDR S&P 500 ETF, and perhaps lags only because of its more recent inception date of 2000. However, topping $150 billion under management, the S&P 500 fund is no slouch — and with an expense ratio that is just 0.04 percent, roughly half of the SPY fund, there may be a reason to think that IVV could give the top dog in exchange-traded products a run for its money in the years to come.
Vanguard Total Stock Market ETF (VTI)
The third-largest ETF by assets is a domestic stock fund, but is a bit more expansive than IVV or SPY. Vanguard’s Total Stock Market fund commands more than $98 billion assets and is comprised of more than 3,600 stocks to include the familiar large-cap names as well as small and mid-sized companies you may not have heard of. Just keep in mind, however, that the holdings are not exactly evenly distributed, with the top 10 positions representing about 18 percent of the entire fund. And, as is typical of Vanguard, the fund is incredibly affordable at just 0.04 percent in annual expenses, or $4 on each $10,000 you invest.
Vanguard S&P 500 ETF (VOO)
We’re not done with S&P 500 benchmarked funds just yet. The Vanguard S&P 500 ETF is another large ETF comprised of the top 500 or so U.S. companies, and it boasts total assets under management of around $93 billion. However, it’s also worth noting that as the pioneer of index funds, Vanguard has a much larger swath of assets under its S&P 500 umbrella when you take into account mutual funds like its Vanguard 500 Index (VFINX) that was established more than 35 years ago by investing icon and Vanguard founder John Bogle. Collectively, these Vanguard S&P 500 products represent a total of more than $440 billion under management.
Vanguard FTSE Developed Markets ETF (VEA)
The VEA fund is a roughly $67 billion ETF that offers a much more comprehensive product that spans different kinds, sizes and geographies. With nearly 4,000 holdings, this ETF is benchmarked to an “all-cap” index of stocks that includes small and mid-sized corporations. It also is spread across developed markets such as Japan, Canada and Europe — with the express mission of excluding U.S.-based firms. This fund features top holdings such as Swiss consumer giant Nestle (NSRGY) and oil giant Royal Dutch Shell (RDS.A). For investors seeking true diversification without duplicating the big stocks in the S&P 500, this Vanguard fund is a good choice.
iShares MSCI EAFE ETF (EFA)
Though a bit of alphabet soup at first glance, the name of this iShares fund makes more sense when you break it down. Benchmarked to an MSCI index, the fund focuses on the EAFE region — that is, Europe, Australia and the Far East. However, that doesn’t make this an emerging markets fund. Like the VEA fund, top positions are multinationals like Japan’s Toyota Motor Corp. (TM) or U.K. energy giant BP (BP). However, since the EFA fund skips the Americas, nations like Canada are left out. The fund’s list is a bit smaller, too, at less than 1,000 total components in this roughly $64 billion ETF.
Invesco QQQ ETF (QQQ)
Back to America, the $63 billion QQQ fund is a bit different than the prior domestic equity ETFs. For starters, it is benchmarked to the Nasdaq 100 index. Secondly, it is not offered by one of the major fund shops. And, at 0.2 percent in annual expenses, it is comparatively costly for a large-cap index fund. QQQ remains incredibly popular because it is one of the simplest ways to get a heavy exposure to the dynamic technology sector via top holdings like Apple (AAPL) and Microsoft Corp. (MSFT). More than 40 percent of holdings are tech stocks, compared to less than 20 percent for an S&P 500 fund.
iShares Core U.S. Aggregate Bond ETF (AGG)
While stocks get most of the attention, it’s important to include fixed-income investments such as bonds in almost every portfolio. Many investors rely on this iShares bond fund to get broad exposure to the U.S. bond market. AGG is a roughly $57 billion ETF that offers exposure to “investment grade” bonds — that is, debt issued by the government and by large corporations with a good credit rating and a low risk of default. About 40 percent of the fund currently is in Treasurys of varying duration, and the rest is in assets such as agency mortgages offered by Fannie Mae or bonds issued by corporations like Bank of America Corp. (BAC) and Goldman Sachs Group (GS).
Vanguard FTSE Emerging Markets ETF (VWO)
Another worthwhile investment theme is emerging markets that are more risky but full of tremendous growth potential. Think nations like China, where both industrialization and a movement toward high-tech economies have provided significantly higher annual growth rates than in the developed world. The $57 billion VWO ETF has about 34 percent of its assets allocated to China, making it the top region, however a host of other areas including Brazil, India and South Africa are well-represented as well. And with an expense ratio of just 0.14 percent, investors can give their investments a global flavor at a very reasonable price.
iShares Core MSCI EAFE ETF (IEFA)
No, you’re not experiencing déjà vu. The 454 billion iShares IEFA fund has a very similar name and ticker to the aforementioned EFA fund. That’s because it has a remarkably similar strategy, focused on an MSCI index that spans Europe, Australia and the Far East. The big difference is that as a “core” fund it includes a much more comprehensive list of components, with about 2,500 total stocks instead of less than 1,000. Many of the top holdings such as Nestle are the same, but farther down the list you’ll find a much broader representation of companies in these regions — including small picks you may not have access to in other ETFs.
The 10 largest ETFs to buy now.
Here are the 10 largest ETFs that long-term investors should consider now:
— SPDR S&P 500 ETF (SPY)
— iShares core S&P 500 ETF (IVV)
— Vanguard Total Stock Market ETF (VTI)
— Vanguard S&P 500 ETF (VOO)
— Vanguard FTSE Developed Markets ETF (VEA)
— iShares MSCI EAFE ETF (EFA)
— Invesco QQQ ETF (QQQ)
— iShares Core U.S. Aggregate Bond ETF (AGG)
— Vanguard FTSE Emerging Markets ETF (VWO)
— iShares Core MSCI EAFE ETF (IEFA)
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10 of the Biggest and Best ETFs to Buy Now originally appeared on usnews.com
