With over 10 trillion US dollars in assets under management (AUM), ETFs have become one of the best investment vehicles for new generation investors.
In 2003, there were only 273 ETFs, but currently, we can count over 8500. More than 30% are US ETFs.
Choosing which ETF suits your investment goals is challenging with several choices in the market.
Luckily, this article will explain what ETFs are? Which are the Best US ETFs, and how do you invest in them for the long term?
What is an ETF?
An ETF (Exchange-Traded Fund) is an investment fund that is listed continuously and seeks to track the performance of a specific market index.
You can trade it on the stock exchange like a share by buying or selling it instantly during the exchange's trading hours.
An ETF is an index fund replicating a stock, bond, or commodity market index. For example, SPDR S&P 500 ETF Trust (SPY) invests in the 500 companies of the American Index.
5 Best US ETFs List:
- SPDR S&P 500 ETF Trust (SPY)
- Vanguard S&P 500 ETF (VOO)
- Invesco QQQ ETF (QQQ)
- Vanguard Total Stock Market ETF (VTI)
- iShares Core S&P 500 ETF (IVV)
1 - SPDR S&P 500 ETF Trust (SPY)
SPY is the most famous and oldest ETF in the United States. It typically leads the rankings for assets under management(AUM) and the highest trading volume.
The fund tracks the most popular US index, the S&P 500.
| Ticker | SPY |
|---|---|
| Issuer | State Street Global Advisors |
| Expense Ratio | 0.09% |
| Asset under management(AUM) | $356.63B |
| Underlying index | S&P 500 |
Top 10 Holdings:
- Apple
- Microsoft
- Amazon
- Alphabet(Google) Class A
- Alphabet(Google) Class C
- Tesla
- Berkshire Hathaway
- Unitedhealth group
- Johnson & Johnson
- NVIDIA Corporation
2 - Vanguard S&P 500 ETF (VOO)
The Vanguard S&P 500 ETF (VOO) seeks to replicate the S&P 500 Index by investing all its assets in the stocks that comprise the Index, holding each stock in approximately the same proportion as its weighting.
| Ticker | VOO |
|---|---|
| Issuer | Vanguard |
| Expense Ratio | 0.03% |
| Asset under management(AUM) | $247.84B |
| Underlying index | S&P 500 |
Top 10 Holdings:
- Apple 6.57%
- Microsoft 5.80%
- Amazon 2.99%
- Alphabet(Google) Class A 1.95%
- Tesla 1.81%
- Alphabet(Google) Class C 1.80%
- Berkshire Hathaway 1.65%
- Unitedhealth group 1.34%
- Johnson & Johnson 1.33%
- NVIDIA Corporation 1.33%
3 - Invesco QQQ ETF (QQQ)
Invesco QQQ is one of the most actively traded ETFs, known by traders and investors seeking great returns and performance. The QQQ replicates the Nasdaq-100 Index™, where the most innovative companies are listed.
| Ticker | QQQ |
|---|---|
| Issuer | Invesco |
| Expense Ratio | 0.02% |
| Asset under management(AUM) | $152.73B |
| Underlying index | Nasdaq-100 |
Top 10 Holdings:
- Apple 12.61%
- Microsoft 10.89%
- Amazon 6.20%
- Tesla 3.97%
- Alphabet(Google) Class C 3.94%
- Alphabet(Google) Class A 3.76%
- Meta Platforms Inc Class A 3.15%
- NVIDIA Corporation 3.06%
- PepsiCo Inc 2.14%
- Costco Wholesale Corp 1.93%
4 - Vanguard Total Stock Market ETF (VTI)
The Vanguard Total Stock Market ETF aims to track the return of the CRSP US Total Market Index portfolio, which represents approximately 100% of the investable US equity market, including large-, mid-, small-, and micro-cap stocks traded on the New York Stock Exchange and the Nasdaq.
| Ticker | VTI |
|---|---|
| Issuer | Vanguard |
| Expense Ratio | 0.03% |
| Asset under management(AUM) | $247.06B |
| Underlying index | CRSP US Total Market Index |
Top 10 Holdings:
- Apple 5.55 %
- Microsoft 4.90 %
- Amazon 2.50 %
- Alphabet(Google) Class A 1.66 %
- Tesla 1.51 %
- Alphabet(Google) Class C 1.46 %
- Berkshire Hathaway 1.29 %
- Johnson & Johnson 1.14 %
- Unitedhealth group 1.12 %
- Meta Platforms Inc Class A 1.08 %
5 - iShares Core S&P 500 ETF (IVV)
The iShares Core S&P 500 IVV has become one of the largest ETFs in the world, known for its blue-chip holding. It also replicates the S&P 500.
| Ticker | IVV |
|---|---|
| Issuer | iShares |
| Expense Ratio | 0.03% |
| Asset under management(AUM) | $286.64B |
| Underlying index | S&P 500 |
Top 10 Holdings:
- Apple 6.56%
- Microsoft 5.97%
- Amazon 2.99%
- Alphabet(Google) Class A 2.10%
- Alphabet(Google) Class C 1.94%
- Tesla 1.86%
- Berkshire Hathaway 1.52%
- Unitedhealth group 1.44%
- Johnson & Johnson 1.43%
- NVIDIA Corporation 1.27%
How do you choose the best US ETFs?
To find the best US ETFs to meet your needs, you must consider some criteria after setting and identifying your financial goals and investment horizon.
Selection criteria:
- Fund size and AUM
- Fees
- Performance
- Liquidity
Fund size and AUM: The size corresponds to the assets under management; If the ETF has a significant AUM, it is financially efficient.
Fees: The expense ratio approximates the costs related to administrative expenses, paperwork, advertising, Etc. That you will pay if you hold that ETF in your portfolio. This cost will naturally be deducted from your performance.
Performance: The performance of an ETF provides a broad indication of the fund's profit or loss over time.
Liquidity: Liquidity allows you to buy or sell your share quickly. If the ETF is not liquid enough, you may have trouble closing your position.
How to invest in the Best US ETFs?
- Step 1: Find the best broker
- Step 2: Open an account
- Step 3: Buy the Best US ETFs.
Step1: Find the best broker.
Having the best broker on your side will give you an edge over other traders and investors. When investing in the best US ETFs, it is crucial to have the best execution and the lowest fees.
Our mission is to provide you with the information and data to help you choose the best broker. You can find them on our comparison page.
Step2: Open an account.
After choosing your broker, you must open an account to start investing.
Most ETFs brokers require a KYC procedure and an ID verification process; after completing those tasks, you are now ready to deposit funds and start investing in the best US ETFs.
Step3: Buy the Best US ETFs
The next step is to buy the US ETF you want from the list we presented. To do so, search for the ETF name on the broker platform and click on the buy button. Each ETF has its trading price; for example, the iShares Core S&P 500 ETF (IVV) currently trades at 387$, and the Invesco QQQ ETF (QQQ) is at 292$.
Our Top Brokers for US ETFs
- eToro (full review here)
- Degiro (full review here)
Why should you invest in ETFs?
- Low fees
- Diversification
- Tax-Efficient
- The simplicity of use.
1 - Low costs:
Management fees for ETFs are significantly lower than those for traditional funds.
ETFs do not include entry fees, and since the dawn of online brokers, transaction costs have been getting increasingly cheaper.
2 - Diversification:
ETFs provide a wide range of benchmarks for investors to deal with all market conditions and implement their strategies.
3 - Tax-Efficient:
Since that ETFs have a passive investing approach, buying and selling securities within the ETF are rare, so there are almost no taxes on capital gains.
4 - The simplicity of use:
You can easily trade ETFs like a simple stock, buying and selling them whenever you want(when the markets are open). You don't have to be an expert or a financial analyst; you will simply buy an asset that tracks an index, a market, or a sector.
Conclusion: Should you invest in the best US ETFs?
The US financial market provides many opportunities for traders and long-term investors.
The S&P 500 has made an annualized average return of 10.5% since its inception.
In 2021 alone, the S&P made a 27% return, and the Nasdaq 22%.
ETFs enable you to get the same profits with the lowest fees, so start investing today in the best US ETFs with the right broker.
Our website has the tools to help you choose the best ETF and broker to meet your needs.
