One of the easiest and best ways to diversify your investment portfolio is to buy exchange-traded funds, or ETFs. These funds can hold hundreds or even thousands of different stocks, bonds and other assets, allowing you to get broad exposure in one place.
The popularity of ETF investing has exploded in recent decades. ETFs are an excellent way to gain passive, diversified exposure to a market index, a market sector or a particular investing theme. But with more than 14,000 ETFs trading worldwide, choosing the right ETFs for your portfolio can be like trying to give yourself a haircut one hair at a time. Thankfully, there are experts whose full-time job is helping determine the best in class ETFs.
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To help you streamline your decision-making process, here are seven of Morningstar’s five-star ETFs with plenty of liquidity, low fees and long-term upside. All the funds also earn gold badges from Morningstar, indicating the company’s analysts have a high conviction that these funds will outperform an index or most of their peers on a risk-adjusted basis over a market cycle:
| ETF | EXPENSE RATIO |
| Vanguard S&P 500 ETF (ticker: VOO) | 0.03% |
| Invesco S&P 500 Equal Weight Industrials ETF (RSPN) | 0.4% |
| Fidelity Enhanced Large Cap Core ETF (FELC) | 0.18% |
| Capital Group Dividend Value ETF (CGDV) | 0.33% |
| Vanguard Russell 1000 Growth ETF (VONG) | 0.07% |
| iShares U.S. Small-Cap Equity Factor ETF (SMLF) | 0.15% |
| FlexShares iBoxx 5-Year Target Duration TIPS ETF (TDTF) | 0.18% |
Vanguard S&P 500 ETF (VOO)
There are many S&P 500 funds to choose from, and VOO is among the best. It gets the distinction of being the most popular S&P 500 ETF with both a five-star rating and gold badge from Morningstar. It’s also one of, if not the, largest S&P 500 ETF on the market with $1.4 trillion in assets under management.
VOO accurately “represents the large-cap opportunity set while charging rock-bottom fees, a recipe for success over the long run,” writes Morningstar Associate Analyst Brendan McCann. He calls VOO a “best-in-class” choice for large-cap investors.
With around 8.7 million shares traded each day on average, VOO is a highly liquid way of investing in the hallmark S&P 500.
Invesco S&P 500 Equal Weight Industrials ETF (RSPN)
The S&P 500 is a market capitalization-weighted index. Companies are weighted according to their size, so the largest companies account for more of the index. This can lead to a high concentration in the top 10 names.
RSPN takes a different approach by weighting each holding equally, regardless of size. It also narrows the S&P 500 down to mostly companies in the industrials sector, with some crossover into technology and consumer cyclical companies. This amounts to 80 holdings.
RSPN gets an above-average process rating from Morningstar’s research team. It tends to hold more high quality stocks than its peers. These are companies with consistent profits, growth and solid balance sheets.
This strategy has paid off. The fund has ranked in the top quartile among its peers over the past five- and 10-year periods. It’s lagging a bit year to date in 2025, falling into the third quartile. But this could just make for a good buying opportunity.
Fidelity Enhanced Large Cap Core ETF (FELC)
If you’re not content to just join the bandwagon on the S&P 500, and instead want the chance to outperform it, consider investing in FELC.
The fund uses quantitative analysis to select a diversified group of stocks that may provide a higher return than the S&P 500. “May” is the keyword here. While FELC has succeeded in beating the S&P 500 over a five-year period, its returns fall behind the index over a one-, three- and 10-year period.
That said, it has consistently and significantly outperformed other large-blend funds, according to Morningstar. And if the analysts are right, it should continue to do so over the coming market cycle. So FELC may yet be a good way to add large-cap stock exposure to your portfolio.
Capital Group Dividend Value ETF (CGDV)
CGDV also aims to outshine the S&P 500, but this time in terms of income. It focuses on dividend-paying companies within the index with the aim of providing a higher average yield than the index itself. It’s achieving that objective at present. CGDV offers a 1.73% SEC yield, compared to around 1.24% from standard S&P 500 funds like VOO.
The fund’s income approach has also given it more of a value slant as opposed to the standard large-blend stance of most S&P 500 funds.
The other feature that sets CGDV apart is its multi-manager approach. “Five named managers run individual sleeves here — all but one with at least 24 years of experience at the firm — and each has the latitude to pursue their best ideas,” writes Morningstar Senior Analyst Stephen Welch.
The managers have played their hands well over the fund’s three-year lifespan. CGDV has ranked in the top quartile of its peer group every year since its debut in 2022.
[READ: 5 Mutual Fund and ETF Red Flags]
Vanguard Russell 1000 Growth ETF (VONG)
The Russell 1000 Growth index may not get the same press as the S&P 500, but it may still deserve a place in your portfolio. The index focuses on the large-cap growth segment of the U.S. stock market. It does this by finding the companies within the Russell 1000 index with relatively high metrics, such as sales per share growth over the past five years.
This creates a portfolio for VONG of just under 400 stocks across all market sectors, but mostly technology at 56.7% of the portfolio. You’ll recognize many top holdings, including Apple Inc. (AAPL), Microsoft Corp. (MSFT) and Nvidia Corp. (NVDA), and many are the same ones you’d find in the S&P 500.
What distinguishes the Russell 1000 from the S&P 500 is the Russell 1000 is willing to accept smaller-size firms, while the S&P 500 only holds the largest. That said, both the index and VONG sit squarely in the large-cap growth category. But this has been a good place to be lately, and VONG is one of the best of the best in this sphere for long-term investors. The fund ranked in the top quartile among its peers in terms of performance over the past five- and 10-year periods.
iShares U.S. Small-Cap Equity Factor ETF (SMLF)
The big companies may get most of the press, but there’s good reason to include small-cap stocks in your portfolio too. These smaller companies have arguably greater long-term growth potential than their bigger brethren. Think of small-caps as the children of the stock market. These small companies still have their biggest growth spurts ahead of them. So for long-term investors, owning a small-cap fund like SMLF can be a smart move.
The fund focuses on five investment factors when choosing stocks for the portfolio: value, quality, momentum, size and volatility. It chooses companies that have historically outperformed the broader market based on these factors without adding extra risk to the portfolio. Morningstar awards this investment process with its highest pillar rating, applauding the fund’s overweight liquidity and yield exposure relative to its peers.
It holds over 800 different companies from every market sector. It’s also far better balanced than your tech-heavy S&P 500 funds with a nearly even split between technology, industrials and financial services.
FlexShares iBoxx 5-Year Target Duration TIPS ETF (TDTF)
Inflation may be subsiding, but if there’d one thing to be learned from the past few years, it’s that one shouldn’t ignore the toll it can take on an investor’s purchasing power. If you still have a wary eye on inflation, TDTF has you covered. It offers a 4.2% 30-day SEC yield by investing in Treasury inflation-protected securities, or TIPS.
TIPS are bonds that adjust their principal based on changes in the consumer price index, or CPI. If the CPI rises, indicating inflation, the principal on TIPS increases proportionately. This means the principal can also fall in times of deflation, but at maturity, you’ll still receive at least the face value back. And between purchase and maturity, TIPS pay interest every six months.
TDTF holds about 20 of these bonds with a target duration of five years. Duration is a measure of how sensitive a bond is to changes in interest rates. A five-year duration indicates the price of these bonds would be expected to fall by 5% for each 1% rise in interest rates. It’s a great pick for investors who want inflation protection with targeted duration exposure.
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7 of the Best 5-Star ETFs to Buy originally appeared on usnews.com
Update 06/18/25: This story was previously published at an earlier date and has been updated with new information.
