Top buy-and-hold ETFs with at least $20 billion in assets.
In 2022, it’s tempting to refresh quotes on your investments throughout the day or tinker with your portfolio in a quest to mitigate some of the persistent volatility. However, the majority of investment research shows that the best way to a profitable retirement for most of us is to buy and hold a diversified portfolio and stick with it rather than actively trade those positions. The reason is that most investors tend to do more harm than good, and incur extra fees and tax burdens on top of those mistakes. So if you really want peace of mind in a rough year for Wall Street, consider a buy-and-hold approach with these large and diversified exchange-traded funds, or ETFs.
SPDR S&P 500 ETF Trust (ticker: SPY)
Launched in 1993, SPY is one of the most popular and widely traded ETFs on Wall Street. It is elegantly simple, tracking the S&P 500 index of the largest U.S. companies such as Apple Inc. (AAPL) and Microsoft Corp. (MSFT). And right now, it has a massive $335 billion in assets under management and trades an average of more than 100 million shares daily. There are some alternative large-cap index funds out there that offer slightly lower cost structures, but if you’re looking for the gold standard among exchange-traded products then this fund is the clear winner.
iShares Core S&P Small-Cap ETF (IJR)
Large U.S. stocks are important as a core holding, but many investors are also interested in the long-term potential of smaller companies that may eventually grow into the next trillion-dollar corporate giant. That’s what this roughly $60 billion iShares fund offers, with exposure to smaller companies that have the potential to grow significantly over time. Benchmarked to the S&P SmallCap 600 Index — which contains the 600 stocks that come after both the 500 largest names in the popular S&P 500 and the next 400 stocks that make up the S&P’s mid-cap index — you get a piece of just over 600 companies, none of which are larger than about $7 billion or $8 billion and some of which are as small as a few hundred million dollars in value. In the long term, there may be significant upside potential even if there tends to be greater short-term risk in stocks like these.
Vanguard Mid-Cap ETF (VO)
In case you want to split the difference between older and more mature companies and young and risky small caps, the middle ground is represented in this $47 billion Vanguard fund. It holds Goldilocks midsize stocks that are neither too big to be stagnant nor too small that a few bad headlines could ruin the company. The fund is benchmarked to the CRSP US Mid Cap Index, and holds just over 370 total stocks including refiner Valero Energy Corp. (VLO), tech firm Microchip Technology Inc. (MCHP) and health care provider Centene Corp. (CNC) to name a few. Stocks like these are worth a look for inclusion in a long-term portfolio both for diversification as well as growth potential.
Vanguard FTSE Developed Markets ETF (VEA)
This Vanguard fund looks outside the U.S., with every single holding located overseas. However, it is limited to developed markets and has many large companies you might recognize despite their foreign headquarters. Right now, weightings in this roughly $90 billion fund include a 19% allocation to Japan stocks like Toyota Motor Corp. (TM), 13% to U.K. stocks like pharmaceutical giant AstraZeneca PLC (AZN) and 10% or so to Canada stocks via mining and energy plays. This “ex-US” ETF offers a great way for investors to get exposure to multinational stocks without duplicating the positions you’ll find in the typical domestic large-cap fund.
Vanguard FTSE Emerging Markets ETF (VWO)
Another international fund with a big following, this $72 billion emerging markets ETF provides investors a way to play the more aggressive economies in Asia and Latin America that may prove more volatile in the short term but which have significant upside potential over the years and decades ahead. The fund is incredibly broad, with 4,500 or so stocks in its portfolio. Top nations in this fund right now include China, India and Brazil, in addition to the island of Taiwan. And lest you think emerging markets are doomed to underperform during times of stress, keep in mind VWO has slightly outperformed the S&P 500 index so far in 2022 to prove the value of looking beyond the typical Western stock vehicles.
Vanguard Total World Stock ETF (VT)
Not interested in slicing and dicing the world of stocks into size or geography? Well, VT takes the guesswork out of things with perhaps the most diversified fund out there. With some 9,400 holdings, this $20 billion ETF holds both domestic and international stocks including big U.S. names like Apple as well as smaller global players you likely haven’t heard of or don’t have an easy way to invest in. Just under 60% of the fund is in the U.S., as our stock market is the largest in the world, but there’s also 10% of assets in emerging markets, and a host of other countries also represented on the list. If you really are a long-term investor just looking to play the global economy over many years, then this is the simplest way to do so in a single ETF.
iShares Core U.S. Aggregate Bond ETF (AGG)
The previous picks have all been comprised of stocks, but AGG is the largest diversified bond fund out there with some $80 billion in assets under management right now. This iShares ETF offers broad exposure to fixed-income markets via investment-grade bonds, U.S. Treasury securities and even a smattering of junk bonds that offer higher yield but a bit more risk. There is assuredly interest rate risk right now in bond markets what with central banks around the globe tightening monetary policy, but in the very long run it’s important to consider diversification across asset classes and not just an “all-in” approach to stocks. Right now, this fund is comprised of some 10,000 individual bonds and yields about 2.9% at present — significantly above the average of about 1.4% for the S&P 500 right now.
7 best long-term ETFs to buy and hold:
— SPDR S&P 500 ETF Trust (SPY)
— iShares Core S&P Small-Cap ETF (IJR)
— Vanguard Mid-Cap ETF (VO)
— Vanguard FTSE Developed Markets ETF (VEA)
— Vanguard FTSE Emerging Markets ETF (VWO)
— Vanguard Total World Stock ETF (VT)
— iShares Core U.S. Aggregate Bond ETF (AGG)
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Update 06/21/22: This story was published at an earlier date and has been updated with new information.