Over the last decade or two, many financial advisors have stopped trying to convince investors to frantically move their money around. Instead they have been recommending a more hands-off approach. That’s because the numbers make it hard to argue that a different course of action will realistically result in better performance than just taking what the market gives you.
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Consider a Fidelity analysis from about a decade ago that looked at client portfolios between 2003 and 2013 and found that individuals who didn’t do a thing were among those who did best. In fact, some of those investors forgot their portfolios entirely — or actually died!
Of course, kicking the bucket isn’t exactly the best investment strategy for those who want to actually enjoy retirement. But if you have the discipline to stop trading as often, then some of these long-term exchange-traded funds (ETFs) may be well-suited for living your best life in your golden years. Each of the following funds have a different angle, but all of these ETFs have been chosen based on long-term potential:
| ETF | Assets under management | Expense ratio |
| Vanguard S&P 500 ETF (ticker: VOO) | $456 billion | 0.03% |
| Vanguard Dividend Appreciation ETF (VIG) | $78 billion | 0.06% |
| Health Care Select Sector SPDR ETF (XLV) | $39 billion | 0.09% |
| Invesco QQQ Trust (QQQ) | $286 billion | 0.20% |
| Global X Artificial Intelligence & Technology ETF (AIQ) | $2 billion | 0.68% |
| Schwab U.S. Small-Cap ETF (SCHA) | $16 billion | 0.04% |
| iShares Core U.S. Aggregate Bond ETF (AGG) | $110 billion | 0.03% |
Vanguard S&P 500 ETF (VOO)
Assets: $456 billion Expense ratio: 0.03%, or $3 annually on every $10,000 invested
When you’re building a list of the best long-term ETFs to buy and hold, a fund tied to the S&P 500 index of the largest U.S. companies is perhaps the most logical place to start. It’s among the most closely followed benchmarks of stocks in the world, and for many investors is a stand-in for the performance of Wall Street in general. This low-cost Vanguard ETF provides simple, cost-effective exposure to these 500 leading companies you know and love including Apple Inc. (AAPL), Microsoft Corp. (MSFT) and more. So why VOO instead of the many other S&P-related index funds out there? Well, it is among the biggest but also the most cost-effective options at a rock-bottom expense ratio. If you want to stay hands-off, VOO is the go-to option for many investors.
Vanguard Dividend Appreciation ETF (VIG)
Assets under management: $78 billion Expense ratio: 0.06%
A twist on the prior fund, this leading Vanguard ETF is the largest dividend-oriented fund by assets. That gives you a bit more stability and a bit more income potential, two things that tend to be very attractive to investors measuring their performance in years and decades instead of weeks and months. You’ll skip over stocks like Amazon.com Inc. (AMZN) that may be giants but don’t provide any dividends at present — but make no mistake, there are more than 300 dominant blue-chip stocks here, ensuring you’ll own a stake in many of the most recognizable and proven stocks on the planet.
Health Care Select Sector SPDR ETF (XLV)
Assets: $39 billion Expense ratio: 0.09%
Speaking of the long haul, the health care sector is a popular option for folks who want to look beyond near-term ups and downs of the economy. After all, there is tremendous stability in the stream of prescriptions, hospital bills and medical product sales during both good and bad environments. What’s more, a demographic shift in America and elsewhere is creating more “customers” via aging patients that will naturally need more care in the years to come. XLV is the leading health care sector fund out there, with more than 60 holdings including Big Pharma giant Eli Lilly & Co. (LLY), insurance giant UnitedHealth Group Inc. (UNH) and diversified medical products icon Johnson & Johnson (JNJ).
Invesco QQQ Trust (QQQ)
Assets: $286 billion Expense ratio: 0.20%
If you don’t want to go all-in on one sector, then perhaps this Nasdaq-100 index fund is a better growth-oriented option than just banking on health care. This Invesco fund is tied to the largest 100 stocks listed on the Nasdaq exchange, which means roughly half the QQQ portfolio is in the information technology sector via tech giants like Apple and Microsoft, while another 15% is in communication services giants such as Google parent Alphabet Inc. (GOOG, GOOGL) and Facebook parent Meta Platforms Inc. (META). The technology sector can be a bit more volatile, but has also been proven to be a driver of tremendous long-term returns.
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Global X Artificial Intelligence & Technology ETF (AIQ)
Assets: $2 billion Expense ratio: 0.68%
Even more aggressive is this Global X fund that is the leading artificial intelligence ETF on Wall Street at present. Admittedly, there’s a bit of a fashionable flavor here as artificial intelligence is all the rage in 2024, and AIQ is having a bit of a moment lately. But if you believe some of the hype, AI has the potential to reshape the global economy in profound ways — much like the dot-com era gave birth to both new companies as well as new business lines for old incumbents.
AIQ has a number of Big Tech icons like Nvidia Corp. (NVDA) but also smaller players like specialized Taiwanese semiconductor designer Global Unichip Corp. — a company you can’t easily buy on domestic exchanges like other large-cap leaders. The 85 or so companies that make up this fund are a great mix of firms that collectively provide a wide play on the potential of AI, which is a high-risk but potentially high-reward area of tech that may be worth a targeted long-term investment.
Schwab U.S. Small-Cap ETF (SCHA)
Assets: $16 billion Expense ratio: 0.04%
Another riskier long-term ETF that prioritizes growth, this Schwab fund is limited to smaller companies that may not be big today but could become future leaders in the years ahead. It holds around 1,700 stocks for an incredibly diversified lineup of companies, and the top sectors include industrials at 18.5% of the portfolio followed by financials at 16% and the health care sector at 14%. With a weighted average market cap of only about $4.7 billion, these are not going to be the large and popular companies you’ll find in the typical index fund. However, if you’re interested in up-and-coming businesses that may offer greater upside as they grow and mature, it’s an interesting option as a long-term ETF to buy and hold.
iShares Core U.S. Aggregate Bond ETF (AGG)
Assets: $110 billion Expense ratio: 0.03%
The largest exchange-traded bond fund right now, AGG deserves a mention on this list of the best long-term ETFs to buy and hold as a representative of this alternative asset class that often supplements stocks in a long-term portfolio. Sure, the current interest environment is a bit uncertain as the U.S. Federal Reserve continues to debate whether it’s going to cut interest rates or keep them elevated to tamp down inflation. But buy-and-hold investors need to consider the importance of diversification into assets other than stocks, and this “aggregate” bond ETF is a great one-stop shop to achieve that goal.
AGG only holds top-rated bonds, but owns both government, corporate and securitized mortgage debt across 11,000 individual positions. AGG yields 3.4% right now to more than double the yield of the typical large-cap stock fund, but more importantly it provides stability and exposure to an asset that can sometimes hang tough when stocks crash and burn. Those factors may provide serious peace of mind for long-term investors.
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7 Best Long-Term ETFs to Buy and Hold originally appeared on usnews.com
Update 06/28/24: This story was previously published at an earlier date and has been updated with new information.
