There’s a psychological phenomenon known as “loss aversion,” in which individuals feel the pain of a loss far more intensely than the pleasure of an equal-sized gain. That means many investors gravitate toward the best safe exchange-traded funds to buy rather than the latest high-flying tech stocks simply because they don’t want the emotional baggage that comes with risky trades.
Besides, reams of investment research show that a buy-and-hold approach is more than adequate for the typical investor. By investing a modest amount of money regularly and sticking with low-cost index funds, you can consistently grow your nest egg over time.
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While artificial intelligence, Bitcoin and biotech often make the flashiest headlines these days, there is still a lot of value in investing in safe ETFs. Not only do these seven established funds provide peace of mind, they can also provide significant upside for long-term investors:
| ETF | Assets | Yield | Expense ratio |
| Vanguard Value ETF (ticker: VTV) | $165 billion | 2.0% | 0.03% |
| iShares MSCI USA Min Vol Factor ETF (USMV) | $23 billion | 1.4% | 0.15% |
| Invesco S&P 500 Low Volatility ETF (SPLV) | $8 billion | 2.2% | 0.25% |
| Pacer Trendpilot US Large Cap ETF (PTLC) | $3 billion | 0.6% | 0.60% |
| Vanguard Total Bond Market ETF (BND) | $150 billion | 4.2% | 0.03% |
| State Street SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) | $43 billion | 3.5% | 0.1353% |
| Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH) | $41 billion | 4.1% | 0.03% |
Vanguard Value ETF (VTV)
Assets: $165 billion Strategy: Value stocks Yield: 2% Expenses: 0.03%
VTV is one of the largest value-oriented index funds available, with a portfolio of more than 300 of the most solid companies on Wall Street. Top holdings include megabank JPMorgan Chase & Co. (JPM) and energy giant Exxon Mobil Corp. (XOM), instead of the usual list of domestic large-cap stocks dominated by tech names. Thanks to a focus on value metrics that favor consistent revenue and profitability, VTV provides a meaningfully higher dividend than the broader S&P 500, with an annual yield of about 2% at present. This safe ETF’s growth potential is admittedly limited thanks to an approach that favors more financial firms and health care companies instead of high-tech leaders and biotech innovators. But investors looking for the stability of value stocks will find peace of mind in this foundational holding.
iShares MSCI USA Min Vol Factor ETF (USMV)
Assets: $23 billion Strategy: Low-volatility stocks Yield: 1.4% Expenses: 0.15%
USMV’s formal name is full of abbreviations and acronyms to keep things short. But the exhaustive description of this ETF is that it’s benchmarked to an MSCI index of domestic stocks that exhibit minimum volatility characteristics when measured against their peers. Its portfolio of about 170 individual holdings leans toward entrenched megacaps like Exxon Mobil and Johnson & Johnson (JNJ), and companies with significant and reliable cash flows. To be 100% clear, “minimum volatility” doesn’t mean a complete lack of ups and downs. It is, however, designed to help protect portfolios from big moves in the broader stock market.
Invesco S&P 500 Low Volatility ETF (SPLV)
Assets: $8 billion Strategy: Low-volatility stocks Yield: 2.2% Expenses: 0.25%
The Invesco S&P 500 Low Volatility ETF is a variation on the prior fund, with a more focused portfolio of only about 100 individual stocks. This list is formulated once per quarter based on the S&P 500 stocks that exhibited the lowest realized volatility over the last 12-month period. Right now, that includes leading real estate investment trust Realty Income Corp. (O) and consumer staples giant Coca-Cola Co. (KO), among others. Even more telling, the top sector is utility stocks at 22% of total assets at present, showing this ETF’s reliance on businesses with the safest and most entrenched operations.
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Pacer Trendpilot US Large Cap ETF (PTLC)
Assets: $3 billion Strategy: Asset allocation Yield: 0.6% Expenses: 0.6%
This Pacer Trendpilot fund offers the lowest yield of any fund on this list, but is likely the most aggressive of the bunch. That’s because it is designed to be fully invested in the S&P 500 like a typical index fund during bull markets, but with a mechanism to reduce your exposure to stocks once momentum wanes. The specific formula involves full investment in the S&P 500 when the index remains above its 200-day moving average, but the general approach is to let your portfolio bank on winners when the S&P is rising — and pull back promptly when the market turns.
Vanguard Total Bond Market ETF (BND)
Assets: $150 billion Strategy: Intermediate aggregate bonds Yield: 4.2% Expenses: 0.03%
The Vanguard Total Bond Market ETF is one of the most popular ETFs of any variety and is the largest exchange-traded bond fund on Wall Street. Its investment approach is deceptively simple, offering diversified exposure to the bond market with an enormous portfolio of more than 11,000 investment-grade bonds. This includes debt securities from top corporations, U.S. Treasury bonds and other issuances that carry a comparatively lower risk of default. While BND shares themselves may not ever deliver world-changing gains, the stability and reliable income make this mammoth ETF one of the best safe investments to buy now.
State Street SPDR Bloomberg 1-3 Month T-Bill ETF (BIL)
Assets: $43 billion Strategy: Ultra-short-term Treasury bonds Yield: 3.5% Expenses: 0.1353%
It is generally true that there is a trade-off between risk and reward on Wall Street. That’s why long-term bonds tend to offer bigger yields than short-term bonds, because if it’s a challenge to predict what will happen in a few months, it’s downright impossible to guess what will happen in a few decades. So while you won’t find tremendous growth potential in short-term U.S. Treasury bonds, you will find one of the most certain investments out there. After all, if Uncle Sam winds up defaulting on loans due in just a few months’ time, then investors will likely have bigger things to worry about.
Vanguard Short-Term Corporate Bond Index Fund ETF Shares (VCSH)
Assets: $41 billion Strategy: Short-term corporate bonds Yield: 4.1% Expenses: 0.03%
A “Goldilocks” bond fund, VCSH offers the stability of short-term bonds but amplifies the yield by taking on slightly more aggressive corporate debt from companies like Bank of America Corp. (BAC) instead of government debt issued by the Treasury Department. To be clear, it’s not like that makes this fund super risky, as it has largely remained range-bound; shares have traded between about $75 and $83 for much of the past two decades. This mix of stability and income makes this one of the best safe ETFs to buy now.
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7 Best Safe ETFs to Buy originally appeared on usnews.com
