With thousands of exchange-traded funds, or ETFs, now on the market, no one fund is right for every investor. Even just at industry leader BlackRock, there are more than 400 choices, according to ETF.com. Which one is right for you, especially as a retirement investor?
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We asked experts at VettaFi and CFRA Research to pore through the offerings from BlackRock’s iShares brand to come up with choices for different kinds of investors. Some are meant to be core holdings for clients who want to “set-it-and-forget-it.” Others are best thought of as ways to balance out a portfolio, by adding a splash of growth-seeking to otherwise safe arrangements or a dose of income for longer-term investors who want some balance for portfolios that seek higher returns, but have to accept more short-term risk and volatility to get it.
Here’s some of what they came up with:
| BlackRock fund | Expense ratio |
| iShares Core S&P 500 ETF (ticker: IVV) | 0.03% |
| iShares Core S&P Total U.S. Stock Market ETF (ITOT) | 0.03% |
| iShares Global Tech ETF (IXN) | 0.40% |
| iShares Russell 1000 Growth ETF (IWF) | 0.18% |
| iShares Core U.S. Aggregate Bond ETF (AGG) | 0.03% |
| iShares Core Dividend Growth ETF (DGRO) | 0.08% |
| iShares S&P 500 Value ETF (IVE) | 0.18% |
| iShares Core MSCI Emerging Markets ETF (IEMG) | 0.09% |
iShares Core S&P 500 ETF (IVV)
For core holdings, you can’t really go wrong with a low-cost fund that tracks the Standard & Poor’s 500-stock index. After all, even Warren Buffett points out that most fund managers, and hardly any self-taught investors, can beat that broad index consistently. That leads you to this giant iShares fund with $335 billion under management as of July 4.
It owns what anyone would expect an S&P 500 index fund to have: Apple Inc. (AAPL), Microsoft Corp. (MSFT), Exxon Mobil Corp. (XOM), The Walt Disney Co. (DIS) and all the other big names. And it performs exactly as you’d expect it to: a 12% annual gain over the last decade, with the same year-to-year volatility of the index it follows. Like the market, this fund, founded in the bear-market year of 2000, had a rough several years early on, but has posted nearly 7% annual returns over its lifetime.
With a management fee of only 0.03% of invested assets, it’s a cheap way to set-and-forget the heart of an individual retirement account, or IRA. Check back when you turn 50.
iShares Core S&P Total U.S. Stock Market ETF (ITOT)
This fund differs from IVV in that it delivers exposure not just to big companies but to the total U.S. stock market, including smaller-cap stocks that can be more volatile (and, when they are working, more rewarding), said Aniket Ullal, head of ETF data and analytics at CFRA. Like its sibling fund, it’s big and cheap: $44 billion under management, with a 0.03% expense ratio.
The difference is that it does better when smaller companies are in favor, and underperforms when the giants are doing well. That means it has underperformed in the last year — it’s up about 12%, while the IVV fund is up 16%. But it held up during the 2000s stagnation: Launched in 2004, it has a lifetime return of nearly 9% annually.
“It’s similar to IVV in that it’s market-cap weighted, but you get it all, large and small,” said Todd Rosenbluth, head of research at VettaFi. “It’s not IVV or ITOT. It’s IVV and ITOT.”
iShares Global Tech ETF (IXN)
Another long-term growth play, this fund tilts a slice of an investor’s holdings toward a long-term growth sector, and provides global exposure, said Rosenbluth. Most of the biggest holdings are U.S. companies, all of which have worldwide operations, but Asian and European names like Samsung Electronics Co. Ltd. (A005930:KR), Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) and ASML Holding NV (ASML) crack the top 10 of its 114 portfolio members.
The fund, which tracks the S&P Global 1200 Information Technology 4.5/22.5/45 Capped Index, is a little more expensive with a 0.40% management fee, but it’s still cheaper than most actively managed tech funds. And it has returned 18% a year over the last decade — 50% more than the S&P 500 fund. It’s up more than 35% this year, but last year’s 30% drop is a reminder of the risks of tech investing.
iShares Russell 1000 Growth ETF (IWF)
Another growth-tilted play, this fund follows the Russell 1000, a growth-oriented index. You’ll likely ride out some volatility, but for IRA money that can’t be touched without penalty until the account holder is 59½, that’s less of an issue. And a good thing that is, since its 29% growth this year matches its 29% 2022 decline.
This $71 billion fund, with an expense ratio of 0.18% of assets, holds at least 500 companies not in the S&P 500, giving a portfolio exposure to an index that covers an estimated 93% of the value of all stocks in the U.S. market.
Nonetheless, since the index is weighted by the market value of the companies in it, that means the top names will be familiar ones, including Meta Platforms Inc. (META) , Berkshire Hathaway (BRK.A, BRK.B) and Tesla Inc. (TSLA). Over time, it has been a solid performer, returning 14.4% a year over the last decade despite the shaky performance last year.
[READ: 7 Best Funds to Hold in a Roth IRA]
iShares Core U.S. Aggregate Bond ETF (AGG)
Both analysts tabbed this giant, diversified bond fund as a core income holding for long-term investors. With $92 billion under management, it holds some of everything, from Treasurys to corporate bonds. It follows a Bloomberg bond index of investment-grade debt with at least a year left until maturity and includes issuers with at least $100 million of debt outstanding. It’s also inexpensive, with a management fee of 0.03%.
“It’s a great starting point for the fixed-income investor,” Rosenbluth said.
It will not, however, make you rich by itself. With a modest loss over the last year and a 10-year track record of gains around 1.4% annually, AGG is a store of value that will make you a little money and protect some portion of your IRA from short-term volatility. For a little more risk but more reward, BlackRock’s iShares iBoxx Investment Grade Corporate Bond Fund (LQD) has returned about 2.4% over the last decade.
But most younger investors will want a relatively small portion of their retirement assets in bonds, experts say.
iShares Core Dividend Growth ETF (DGRO)
Sometimes, investors may try to balance income, and the safety it implies, with growth by investing in stocks that pay dividends. The idea is that the appreciation of the stock provides the growth, while the dividend provides both income and a store of value to protect the stocks’ downsides. At BlackRock, that leads to the $24 billion Core Dividend Growth Fund.
The fund looks for companies with a consistent pattern of dividend growth, and indexes itself to Morningstar’s US Dividend Growth Index. Its 427 holdings are familiar large companies, including tech names like Apple and Microsoft, but not Amazon.com Inc. (AMZN), which doesn’t pay a dividend. But its largest group of holdings are in sectors like health care and financial services, which don’t grow as fast as tech in good times.
That has made DGRO a fund that beats bad markets, like 2018 and last year, but underperforms in hot markets like the second half of 2020. Its average annual total return since its 2014 inception is a very respectable 10.3%.
“It’s income investing with a growth tilt,” Rosenbluth said. “It reduces risk profile while leaving you upside.”
iShares S&P 500 Value ETF (IVE)
For investors who don’t like the high valuations of tech and growth stocks, this fund that strips out the so-called value plays in the S&P 500 may be a good fit. Its performance over the long term trails the flagship 500, but with fewer of the highs and lows.
With $25 billion under management and an expense ratio of 0.18%, the fund’s top holdings have a lot of overlap with IVV. But the value fund’s top 10 includes Walmart Inc. (WMT) and JPMorgan Chase & Co. (JPM), but omits artificial intelligence chipmaker Nvidia Corp. (NVDA) and electric-vehicle maker Tesla.
That has been a bad move this year, since Nvidia and Tesla have been running hot, but at other times it has been the key to some savings on Pepto-Bismol. The value fund is up 12% this year to the broader IVV’s 16%, but last year it only fell 5.4% while IVV was losing 18% of its value. Over time, the broader fund has delivered: If you had put $10,000 into each fund 10 years ago, you’d have more than $26,000 in the value fund but more than $32,000 in IVV.
iShares Core MSCI Emerging Markets ETF (IEMG)
Emerging markets are a place to look for more growth, though it can be elusive. iShares’ EM offerings include this $71 billion fund, which has a relatively low expense ratio of 0.09%
Indexed to the MSCI Emerging Markets Investable Market Index, the BlackRock fund’s numbers have matched its benchmark almost perfectly over the past decade. So its soft performance is more a reflection of emerging markets than of anything BlackRock is doing right or wrong. But the 2.4% annualized return since 2013 lags U.S. indexes badly.
Top holdings include Chinese online retailer Alibaba Group Holding Ltd. (BABA), which is down 56% over the last five years, and Tencent Holdings Ltd. (TCEHY), down 13%, whose struggles mirror China’s post-COVID dislocation. Winners like Taiwan Semiconductor and Indian outsourcer Infosys Ltd. (INFY) keep the fund in the green.
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