The global ETF market has shown phenomenal momentum over the past few years. During the Q1 of 2023, U.S. ETF trading volume as a percentage of total U.S. equity volume reached nearly 40% as compared to an average of 32% in 2022.

Exchange Traded Funds combine the features of Index funds and that of stocks – Most ETFs are Index Funds since they track or benchmark to a specific index, and because they are listed and traded on exchanges, they are like stocks.

S&P 500 index ETF

The S&P 500 is a stock market index that tracks the top 500 companies listed on the index. The index covers approximately 80% of the available market capitalization of the whole gamut of stocks listed on US markets.

Instead of buying individual stocks of the S&P 500 index, one can buy units of an ETF linked to the index. S&P 500 index ETF is appealing to investors who want to diversify their portfolio with large-cap U.S. stocks, having very low costs and high liquidity.

Many S&P 500-based ETFs have given good returns like SPDR S&P 500 ETF Trust (SPY), Vanguard S&P 500 ETF (VOO), iShares Core S&P 500 ETF (IVV), SPDR Portfolio S&P 500 ETF (SPLG), Invesco S&P 500 Equal Weight ETF (RSP) with low expense ratio and good annual yield.

However, SPDR S&P 500 ETF Trust (SPY), the largest and oldest ETF in the world, is a better option to go for. The most attractive feature is its low expense ratio of 0.09%. Being the oldest and largest ETF with a positive growth rate makes it the best choice for investors looking for good returns in the long run.

Also Read: Index investing in the stock market – What it is and how it helps investors

NASDAQ 100 ETF

Nasdaq 100 is an equity index that represents the top 100 of the largest domestic and international non-financial companies, such as Apple, Microsoft, Amazon, and Tesla, based on market capitalization. To take exposure in Nasdaq 100 stocks, one may consider investing in Invesco QQQ ETF. In the USA, the popular Invesco QQQ Trust, which tracks the Nasdaq 100, was launched in 1999. It has total net assets worth $189.028B and an annual expense of 0.20%.

Dow Jones Industrial Average (DJIA) ETF

SPDR Dow Jones Industrial Average ETF Trust (DIA) is the best ETF for investors looking for replicating the performance of the Dow.

DJIA is a stock market index that tracks 30 large ( commonly known as blue-chip ) companies trading on the New York Stock Exchange (NYSE) and Nasdaq, solely including US-based businesses.

Though many ETFs track down, DIA is the most preferred DJIA ETF having a total net assets value of $27.650B.

However, risks are escalating in markets, expanding and evolving faster than ever. Investing in ETF should be done after critically evaluating various market indicators like expense ratio, long-run performance, liquidity, the difference between the price and the NAV, tracking error, and dividend yield.