Buy-low and sell-high remain the time-tested formula to make money in the stock market. Easier said than done, selection and picking the right stock for the portfolio may not be an easy task for all investors. There are exchange-traded funds (ETFs) to help investors make a relatively better bet in the equity markets. The US stock market offers several ETFs across various market capitalization, sectors, and themes. If you are looking to diversify your portfolio with US stocks, these ETFs can be a good starting point.
An ETF is a kind of mutual fund type that tracks a certain index and by investing in it you end up buying all the stocks of the index in the same proportion as held in the index. ETFs are low-cost investments that enable one to gain exposure to multiple stocks belonging to the same index simultaneously. They take several different shapes and often follow numerous indexes and industries. They even have a distinct Ticker symbol, much like stocks. Units of an ETF may only be bought or sold on a stock exchange during trading hours.
The majority of ETFs are benchmarked against prominent stock market indices, including the S&P 500, Nasdaq 100, Russell 1000, and Russell 2000. Some ETFs have benchmarks against particular industries, including the oil and energy or real estate sectors.
SPDR S&P 500 ETF Trust (SPY)
The SPDR S&P 500 ETF, also referred to as the SPY ETF, is an exchange-traded fund (ETF) that tracks the S&P 500 index, a diverse group of large-cap US firms operating in eleven key industries. You can gain exposure to some of the greatest US stocks by investing in SPY ETF, which is usually regarded as the best single indicator of large-cap US equities. Information technology, health care, and communications services make up the top three industries in the S&P 500, accounting for about 50% of the index, while Microsoft, Apple, and Amazon are the top three index pick in terms of weight.
iShares Core S&P 500 ETF (IVV)
The iShares Core S&P 500 ETF tracks the investment performance of an index composed of large-capitalization U.S. equities. The benchmark index is S&P 500 Index.
Vanguard S&P 500 ETF (VOO)
Invests in stocks in the S&P 500 Index, representing 500 of the largest U.S. companies. Goal is to closely track the index’s return, which is considered a gauge of overall U.S. stock returns. The Expense ratio of VOO is 0.03%.
SPDR Dow Jones Industrial Average ETF Trust (DIA)
DIA tracks the Dow Jones Industrial Average (DJI), sometimes known as the Dow 30, which is a price-weighted index of 30 large-cap US equities. The Dow 30 is a distinctive index that differs slightly from some of the other top US indices. The Dow 30 index includes solely US-based businesses. According to the S&P indices website, “a stock is added to the index only if the company has an excellent reputation, demonstrates sustained growth, and is of interest to a large number of investors.” In contrast to other indices, the Dow 30 selection is not governed by quantitative rules or market capitalization.
iShares Russell 2000 Growth ETF (IWM)
The Russell 2000 index, which includes 2000 small capitalization businesses, is the one to use if you as an investor want to diversify among small-cap US stocks. The exchange-traded fund (ETF) iShares Russell 2000 ETF allows investors to have exposure to all Russell 2000 stocks (IWM).
iShares Russell 1000 Growth ETF
The iShares Russell 1000 Growth ETF tracks the investment performance of an index composed of large- and mid-capitalization U.S. equities that exhibit growth characteristics. Exposure to U.S. companies whose earnings are expected to grow at an above-average rate relative to the market The Expense ratio is 0.18%.
Vanguard Total Stock Market ETF (VTI)
You may access the entire US equity market, including small, mid, and large-cap growth and value firms, through the Vanguard Total Stock Market ETF (VTI). VTI gives you exposure to over 3900 equities in the US stock market, including the Nasdaq 100, Dow 30, Russell 2000, and S&P 500.
The five major industries for VTI are technology, consumer discretionary, industrials, health care, and financials. Apple Inc., Microsoft Corp., Alphabet, Amazon.com Inc., Facebook Inc., Tesla Inc., Berkshire Hathaway Inc., NVIDIA Corp., JPMorgan Chase & Co., and Johnson & Johnson are a few of the top holdings.
Vanguard Growth ETF
Vanguard Growth ETF tracks the investment performance of the CRSP US Large Cap Growth Index, an unmanaged benchmark representing the growth stocks of large U.S. firms. Vanguard Growth ETF is an exchange-traded share class of Vanguard Growth Index Fund. The Expense Ratio is 0.04%.
Schwab U.S. Large-Cap Growth ETF
The fund’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. Effective after the market close on March 10, 2022, this ETF underwent a 2-for-1 forward share split, which increased the number of shares outstanding and decreased the Net Asset Value (NAV) per share. The share split did not impact returns or change the total value of a shareholder’s investment.
Invesco QQQ Trust
One such ETF that allows you access to all 100 Nasdaq companies with a single investment is the Invesco QQQ Trust (QQQ). Exchange-traded fund Invesco QQQ follows the Nasdaq 100 Index which based on market capitalization, consists of 100 of the biggest domestic and foreign nonfinancial companies listed on the Nasdaq Stock Market. Apple, Microsoft Corporation, Amazon, Meta, and Tesla are QQQ’s top five holdings.