The S&P 500 is set to finish 2024 with returns of about 27% on the year, and high fliers like Palantir Technologies Inc. (ticker: PLTR) and Nvidia Corp. (NVDA) have more than doubled their investors’ money since Jan. 1. In this kind of environment, it’s tempting to think that it’s easy to trade in and out of a fashionable company to make a quick and easy profit.
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But research shows that this approach is easier said than done. Most investors do more harm than good when they trade too much. Not only are taxes and fees higher, but investors are just as likely to miss out on an opportunity or buy a dud as they are to tap into outperformance.
There are exceptions, of course. But rather than presume you’re smart enough to consistently beat Wall Street, it may pay off more to take a hands-off approach via the following funds that represent the best long-term exchange-traded funds, or ETFs, to buy and hold. All offer different strategic approaches, but each one of these ETFs is a long-term investment designed to deliver over years and decades rather than just weeks or months:
| ETF | Assets | Expense Ratio |
| iShares Core S&P 500 ETF (IVV) | $577 billion | 0.03% |
| iShares Core S&P Small-Cap ETF (IJR) | $94.7 billion | 0.06% |
| Invesco QQQ Trust (QQQ) | $316.6 billion | 0.20% |
| Vanguard Dividend Appreciation ETF (VIG) | $106 billion | 0.06% |
| Vanguard Total International Stock ETF (VXUS) | $442.8 billion | 0.08% |
| Vanguard Total World Stock ETF (VT) | $55.5 billion | 0.07% |
| Vanguard Total Bond Market ETF (BND) | $345.7 billion | 0.03% |
iShares Core S&P 500 ETF (IVV)
Assets: $577 billion Expense ratio: 0.03%
The second-largest ETF behind the very popular and similarly structured SPDR S&P 500 ETF Trust (SPY), IVV is tied to the S&P 500 index of the largest U.S. companies. The big difference between IVV and SPY is the fee structure, however, with a rock-bottom expense ratio of 0.03% versus SPY’s 0.095%. The portfolio features all S&P 500 components, led by trillion-dollar tech stocks such as Apple Inc. (AAPL) and Microsoft Corp. (MSFT). This simple, cost-effective exposure to the biggest domestic stocks makes IVV a foundational holding for almost every portfolio and one of the best long-term ETFs to buy and hold.
iShares Core S&P Small-Cap ETF (IJR)
Assets: $94.7 billion Expense ratio: 0.06%
Another great long-term ETF is this sister iShares fund that focuses more on the S&P 600 index of small-cap stocks instead of its larger and more popular cousin. The index provider divides the top 1,500 U.S. corporations into three tranches: the 500 largest companies making up the S&P 500, the next 400 making up the mid-cap S&P 400 index, and then the 600 coming after that representing the small-cap S&P 600. While tech stocks dominate large-cap funds, the stocks in this fund are most commonly in the financial sector (18%), industrials (17%) or consumer discretionary companies (15%). Top stocks include retailer Bath & Body Works Inc. (BBWI) and Alaska Air Group Inc. (ALK), and the average market cap across all holdings is just $3.2 billion at present. Small-cap stocks can provide significant long-term upside, making IJR worth a look for investors seeking up-and-coming growth opportunities.
Invesco QQQ Trust (QQQ)
Assets: $316.6 billion Expense ratio: 0.2%
Another long-term ETF with a growth focus, the Invesco QQQ Trust is tied to the Nasdaq-100 index of the largest stocks listed on this tech-heavy stock exchange. That means Apple, Microsoft, Nvidia and Amazon.com Inc. (AMZN) make up the top four holdings — and thanks to a weighting based on market value, more than half of all assets are in the technology sector. Investors should be aware of this bias, as the QQQ ETF is definitely less diversified than some of the other alternatives on this list. That said, if you’re interested in the long-term growth potential of tech, then this ETF is a simple one-stop shop to tap into the top stocks in this sector.
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Vanguard Dividend Appreciation ETF (VIG)
Assets: $106 billion Expense ratio: 0.06%
The largest dividend-focused ETF out there, VIG invests in large-cap stocks with a record of growing their dividends year over year. Admittedly, that sometimes means the current yield isn’t particularly impressive — and in fact, this ETF yields a rather lackluster 1.6% at present. But dividend growth is a powerful driver of long-term returns as companies consistently increase payouts over time. Top holdings include well-known and stable dividend payers like JPMorgan Chase & Co. (JPM) and Broadcom Inc. (AVGO), with about 340 total dividend payers making up the portfolio of this long-term dividend ETF.
Vanguard Total International Stock ETF (VXUS)
Assets: $442.8 billion Expense ratio: 0.08%
A successful long-term investing strategy also may require diversification across geography to help tap into overseas opportunities or smooth over some of the local challenges experienced by Wall Street. That makes the Vanguard Total International Stock ETF an interesting long-term ETF to consider as it gives investors access to more than 8,500 stocks headquartered in foreign markets around the world. Many companies in the VXUS portfolio are well established and familiar to U.S. investors, including Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), Danish diabetes specialist Novo Nordisk A/S (NVO) and China tech powerhouse Tencent Holdings Ltd. (OTC: TCEHY). Top regions of focus include Japan at 16%, the U.K. at 9% and Canada at 8% of assets.
Vanguard Total World Stock ETF (VT)
Assets: $55.5 billion Expense Ratio: 0.07%
If you’d rather not try and slice things up by size, sector or geography, then consider this “total world” fund. This long-term ETF covers almost all of the global stock market, with a wide-reaching portfolio of nearly 9,800 stocks to touch on companies of all industries, sizes and geographies. U.S. equities represent about 65% of assets, and familiar names like Apple are among the top holdings, so you definitely won’t miss out on any growth on Wall Street. The fund also includes a deep list of complementary holdings outside the U.S., including multinational leaders in Europe and Asia, to ensure you have a piece of the biggest companies on the planet.
Vanguard Total Bond Market ETF (BND)
Assets: $345.7 billion Expense ratio: 0.03%
Stocks should be a core part of any long-term investing strategy, but diversifying into other assets can also be beneficial and reduce your overall risk profile. BND is a titan in the bond market, ranking among the 10 largest ETFs of any kind and providing a simple way to play the full breadth of fixed-income investments. This long-term ETF has an enormous portfolio of almost 18,000 “investment grade” bonds, including debt securities from top corporations like Bank of America Corp. (BAC) along with U.S. Treasurys. Right now, about 50% of total assets are in government bonds, with another 26% or so in corporate debt and most of the rest in “securitized” bonds that focus on pools of mortgage-related assets. Together, the bonds in this fund add up to drive a yield of 4.5% — more than three times the average dividend among S&P 500 stocks.
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7 Best Long-Term ETFs to Buy and Hold originally appeared on usnews.com
Update 12/26/24: This story was previously published at an earlier date and has been updated with new information.
