Best ETFs of April 2024

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Fees

$0*

Account Minimum

$0

Promotion

3%

Pricing

$0*

Additional Info*

Fees

• Commission for U.S. stocks and ETFs: $0
• A trading activity fee of $0.000166 per share applies when selling equities
• Regulatory fee of $8.00 per $1,000,000 of principal on equity sells

Pricing

• Standard account: $0
• Robinhood Gold: $6.99/month or $75/year
• Includes higher interest on cash sweep accounts, additional research data and better rates on margin trading

Best ETFs of 2024

Best Total Stock Market Index ETF

Vanguard S&P 500 ETF (VOO)

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Assets under management

$389.2 billion

Avg. 5-year total return

14.30%

Fees

None

Expense Ratio

0.03%

Why we chose it

Vanguard was the company that popularized low-cost index mutual funds and it now offers many of its Index funds as ETFs. The Vanguard S&P 500 ETF (VOO) tracks the S&P 500 index. Its low expense ratio, total assets under management and performance help make it one of the best large-blend ETFs.

Pros

• Returns that track the performance of the S&P 500
• 0.03% expense ratio
• Vanguard is a long-standing, trusted name in index investing

Cons

• May not be appropriate for those with shorter time horizons
• Index funds will match, but never beat the broader market
• May provide too much exposure to the technology sector

Best Target Date ETF

iShares LifePath Target Date 2045 ETF (ITDE)

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Assets under management

$3.91 million

Avg. 5-year total return

N/A

Fees

None

Expense Ratio

0.11%

Why we chose it

Target-date ETFs are an age-based investing strategy. These ETFs offer a diversified mix of stocks and bonds that shift from risky assets to conservative assets as you near retirement. They may be an especially attractive option for investors who don’t have access to 401(k) or other employer-sponsored retirement plans. Blackrock offers 10 low-cost target-date ETFs staggered out over five-year increments. This includes IShares LifePath Target Date 2045 ETF (ITDE).

Pros

• Simple, all-in-one investment option that balances risk and returns
• Provides decreasing risk as you near retirement

Cons

• Less tax-efficient than allocating bonds and stocks across tax-advantaged and taxable accounts
• Assumes that all investors with similar retirement dates have similar investment objectives
• May provide less exposure to bonds than ideal for younger investors

Best Large Cap ETF

Schwab U.S. Large-Cap ETF (SCHX)

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Assets under management

$38.9 billion

Avg. 5-year total return

14.06%

Fees

None

Expense Ratio

0.03%

Why we chose it

A large-cap ETF can provide returns that mirror the broader stock market, weighted toward blue chip stocks that typically provide more stable returns and dividends. The Schwab U.S. Large-Cap ETF (SCHX) will give you exposure to a market-weighted mix of large-cap stocks with a low expense ratio.

Pros

• Diversified exposure to large-cap U.S. stocks
• Low expense ratio

Cons

• Won’t provide the growth opportunity of emerging sectors
• Limited exposure to international and emerging markets
• May provide over-exposure to U.S. tech sector

Best Large Growth Fund

Fidelity Crypto Industry and Digital Payments ETF (FDIG)

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Assets under management

$69.1 million

Avg. 5-year total return

N/A

Fees

None

Expense Ratio

0.39%

Why we chose it

If you want exposure to crypto in your investment portfolio but want a balanced investment that doesn’t require you to buy and store your own crypto assets, the Fidelity Crypto Industry and Digital Payments ETF (FDIG) is a good option. You’ll get exposure indirectly to cryptocurrency through the fund’s investments in companies that are engaged in the business of cryptocurrency and payment processing.

Pros

• Exposure to the cryptocurrency sector with less expense and risk compared to owning crypto
• Historical market swings are more moderate than direct cryptocurrency investment
• Reasonable expense ratio

Cons

• Newer ETF with only $69M under management.
• Top 10 holdings represent 62% of assets.
• Not very diversified—only holds 44 companies

Best Bond ETF

Fidelity Total Bond ETF (FBND)

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Assets under management

$7.08 billion

Avg. 5-year total return

1.85%

Fees

None

Expense Ratio

0.36%

Why we chose it

If you’re looking for long-term wealth preservation, you probably prefer to be invested in U.S. treasuries and high-quality corporate bonds. The Fidelity Total Bond Fund ETF (FBND) provides exposure to intermediate-term bonds that will give you stable returns that will generally beat inflation over the long term.

Pros

• 63% of holdings are in AAA-rated bonds
• Large fund with $7B under management
• Easy way to get broad exposure to bonds while retaining liquidity

Cons

• High exposure to U.S. treasuries
• No guarantee of protection against inflation
• Lower returns on average than stock funds

Best ESG ETF

iShares ESG Aware MSCI USA ETF (ESGU)

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Assets under management

$13.27 billion

Avg. 5-year total return

15.54%

Fees

None

Expense Ratio

0.15%

Why we chose it

 If you want your investment dollars to have a positive impact on the world, then investing in an ETF that makes investments in companies with positive environment, social and governance (ESG) characteristics might be a good choice. The iShares EST Aware MSCI USA ETF (ESGU) has a low expense ratio and invests largely in the MSCI ESG Focus index. The fund’s underlying index excludes tobacco and controversial weapons companies.

Pros

• ESG investment with low expense ratio
• Large fund with $13B under management
• Underlying index attempts to track returns of the overall market

Cons

• Investments include many companies with large environmental footprints
• Under-exposure to global companies
• Possible over-exposure to the technology sector

Best Healthcare EFT

Health Care Select Sector SPDR ETF (XLV)

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Assets under management

$40.64 billion

Avg. 5-year total return

11.06%

Fees

None

Expense Ratio

0.09%

Why we chose it

In 2022, healthcare accounted for 17.3% of U.S. gross domestic product, which will likely increase as the U.S. population ages. You can get broad exposure to this growing slice of the economy through the Health Care Select Sector SPDR ETF (XLV). It comes with a low expense ratio and has broad exposure across pharmaceuticals, insurance companies, biotechnology, life sciences and medical supply companies.

Pros

• Broad exposure to biotech and pharmaceuticals
• Sector growth is tied to long-term population trends in the U.S.
• Large fund with low expense ratio

Cons

• Underweights healthcare providers, as many large healthcare providers are private
• Pharmaceutical companies make up most of the top-10 holdings
• Healthcare industry investment returns may be tied to public policy

Best Real Estate ETF

Vanguard Real Estate ETF (VNQ)

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Assets under management

$32.2 billion

Avg. 5-year total return

3.86%

Fees

None

Expense Ratio

0.12%

Why we chose it

If you believe that interest rates have peaked, it might be time to invest in real estate since real estate performance tends to inversely correlate with interest rates. The Vanguard Real Estate Index Fund ETF seeks income and moderate capital appreciation over the long term by investing in real estate investment trusts (REITs) and real estate companies. Among real estate ETFs, Vanguard’s fund stood out for its low expense ratio and its large amount of net assets under management.

Pros

• May be more tax-advantaged than direct investment in REITs.
• Low expense ratio and highly liquid ETF.
• Offers more diversification than individual REITs.

Cons

• Real estate is impacted by interest rates.
• Non-diversified fund has 48% of its assets in its top 10 holdings.
• Sectors with high dividends often have more tax costs than sectors offering capital appreciation.

Best Technology Sector ETF

Technology Select Sector SPDR® ETF (XLK)

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Assets under management

$63.89 billion

Avg. 5-year total return

25.72%

Fees

None

Expense Ratio

0.09%

Why we chose it

If you’re bullish on technology, purchasing shares of the Technology Select Sector SPDR® ETF (XLK) can move your investment dollars into this sector more easily than putting together a portfolio of individual tech company stocks. This sector ETF offers a low expense ratio and is a well-established fund with a 20+ year history.

Pros

• Low expense ratio fund offering exposure to the U.S. tech sector
• Fund invests in large, well-known consumer-facing companies 
• Large, low-cost fund

Cons

• Apple and Microsoft are over 40% of the fund’s holdings
• Won’t provide exposure to emerging market technology growth
• Fund has historically lagged its underlying index

Best U.S. Treasury ETF

Vanguard Extended Duration Treasury ETF (EDV)

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Assets under management

$3.14 billion

Avg. 5-year total return

-4.05%

Fees

None

Expense Ratio

0.06%

Why we chose it

U.S. treasuries are arguably the most secure investment of all because they are backed by the full faith and credit of the United States. The Vanguard Extended Duration Treasury ETF (EDV) tracks the performance of the Bloomberg U.S. Treasury STRIPS 20-30 Year Equal Par Bond Index, which includes treasuries with maturities ranging from 20 to 30 years. The fund invests exclusively in government bonds and offers investors a way to invest in U.S. government bonds while retaining the liquidity of an exchange-traded fund.

Pros

• Investment option that offers the security of U.S. government bonds
• Extremely low expense ratios
• Offers liquidity in a long-term asset class

Cons

• Lower returns than many other investment classes
• Not inflation-protected
• I-Bonds may be more attractive to individual investors

Best Growth ETF

Fidelity Growth Opportunities ETF (FGRO)

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Assets under management

$241.96 billion

Avg. 5-year total return

N/A

Fees

None

Expense Ratio

0.59%

Why we chose it

Growth funds invest in companies fund managers feel have a better opportunity for growth than the wider market. The Fidelity Growth Opportunities ETF (FGRO) was launched in 2021 and last year significantly outperformed the Russell 1000 Growth Total Return index. On February 26, 2024, this fund will undergo a name change to Fidelity Fundamental Large Cap Growth ETF (FFLG) along with investment and portfolio management changes.

Pros

• Offers diversified growth-oriented investments
• Actively-managed fund run by Fidelity with a relatively low expense ratio
• Can be used to segregate growth stock investments in tax-advantaged account

Cons

• Younger fund with no long-term track record
• Fund bets heavily on the technology sector
• Higher expense ratio than index funds

Best Dividend ETF

SPDR S&P Dividend ETF (SDY)

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Assets under management

$20.10 billion

Avg. 5-year total return

8.36%

Fees

None

Expense Ratio

0.35%

Why we chose it

If you’re investing for income, you may prefer to invest in companies that have a history of continuously increasing dividends. The SPDR S&P Dividend ETF seeks to invest in a basket of companies that mirror the S&P High Yield Dividend Aristocrats Index and has a policy of investing in companies that have consistently increased dividends for at least 20 consecutive years. The fund provides consistent dividends with a reasonable expense ratio.

Pros

• Large fund with a relatively low expense ratio
• Income through consistent dividends
• Frequently traded ETF

Cons

• Dividend distributions may have fewer tax advantages than capital gains
• Investment objectives may miss opportunities for capital growth
• Historical returns have lagged the target index slightly

Best Emerging Markets ETF

Vanguard Emerging Markets Stock Index Fund ETF (VWO)

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Assets under management

$71.9 billion

Avg. 5-year total return

2.29%

Fees

None

Expense Ratio

0.08%

Why we chose it

The Vanguard Emerging Markets Stock Index Fund ETF (VWO) offers a diversified mix of investments in companies in emerging markets that mimics the FTSE Emerging Markets All Cap China A Inclusion Index. On top of a low expense ratio, investments aren’t weighted in a few companies—its top 10 holdings represent just 17% of its 4773 investments.

Pros

• Opportunity for high growth from investment in emerging markets
• Access to emerging market investments in a U.S. traded fund
• Large ETF that is frequently traded with a low expense ratio

Cons

• Emerging market investments are often volatile and dependent on geopolitical factors
• ETF trades at a higher premium/discount than most other index ETFs
• Possible overweighting on China and the financial sector

About Our Market Data

Expense ratios, premium/discounts and median bid/ask spreads are subject to change, based on market conditions. The data in this article was collected on February 8, 2024.

What Are ETFs?

An exchange-traded fund (ETF) is an investment vehicle that owns a basket of securities and is traded on an exchange, like the New York Stock Exchange. ETFs are similar to mutual funds, in that they bundle other securities into a single investment, but they provide more liquidity because they are continuously traded.

There are ETFs for nearly every investment objective—around 3,000 ETFs are traded on U.S. stock exchanges daily. Here are some of the common types of ETFs:

• Index ETFs seek to mimic the returns of a specific index like the S&P 500 or the Russell 2000 with minimal expenses.
• Sector ETFs invest in companies in a specific sector or industry or that have exposure to a specific sector or industry.
• Style ETFs offer diversified investments in companies that match a specific investing style like growth or value investing. 
• Target Date ETFs offer a mix of securities that offer an appropriate balance of risk and return for investors looking to retire around a certain date range.
• Commodity ETFs invest in a specific commodity like gold or oil.
• Actively Managed ETFs are run by investment managers who actively pick underlying investments toward a specific investment objective.

How Do ETFs Work?

As an investor, you can purchase an ETF just like you buy a stock or other market-traded investment. ETFs have a ticker symbol and the price changes continuously when markets are opened. Like a stock, you can purchase an option on an ETF or trade ETFs on margin. Some brokerages allow you to purchase fractional ETFs.

As shares of an ETF are purchased or sold, the ETF purchases or sells shares of underlying securities and either issues or redeems shares to keep the market price in line with the total price of the ETF’s investments. This is why most ETFs, especially ETFs that hold long-term investments like bonds or treasuries, hold some portion of their assets in cash. But institutional investors also participate in ETFs through the purchase and sale of creation units, which help maintain an ETF’s liquidity and ability to track its market price.

Why Would You Need an ETF?

ETFs can be an attractive investment option for their liquidity and tax advantages. In some cases, ETFs open up asset classes that would otherwise be unavailable to retail investors. Here are some reasons why you might need an ETF:

• You don’t have the minimum to invest. Mutual funds often require a minimum investment, which can be several tens of thousands of dollars to access preferred fund classes with lower fees. In contrast, you can purchase one share of an ETF and many brokerages will let you purchase fractional shares of popular ETFs.
• Simplicity. ETFs bundle several underlying investments made toward a specific objective. For many people, an ETF provides a simple way to get a diversified investment portfolio in a single purchase.
• Tax advantages. ETFs can be more tax-efficient than other investments due to how they are managed. An ETF can use institutional investors and in-kind share creation and redemption to manage the cost basis of their underlying holdings.
• Trading flexibility. You can trade ETFs using market orders, stop orders and limit orders. You can short-sell ETFs or buy ETFs on margin. These options are not always available on investments in comparable asset classes.

How To Choose the Best ETFs 

While investing in an ETF can simplify your investing, you’ll want to be sure that you are investing in the right ETF. Here are some things you should keep in mind when researching ETFs:

• What are the ETF investment objectives?
• What are the ETF’s costs and expenses?
• How frequently is the ETF traded?
• How variable is the ETF premium/discount?
• What are the largest holdings of the ETF?

Understand the ETF’s Investment Objectives

To choose the best ETF, consider ETFs that align with your investment objectives. Some ETFs track a certain sector, others offer a basket of securities that tracks an index and others offer a managed investment that seeks growth or dividends. For ETFs that track an index, you can usually use your brokerage website to look up how closely the ETF tracks its underlying index. 

Know the Costs

The biggest cost to consider when investing in frequently-traded ETFs is the net expense ratio. This is the amount of the fund’s investment that goes toward fund management and overhead. Index ETFs typically have lower expense ratios than actively-managed and specialty ETFs. 

Your brokerage may also charge trading fees to buy or sell ETFs, but many brokerages offer ETFs with no commissions. Knowing what it will cost to trade and hold an ETF can enable you to accurately compare an ETF against other uses of your capital.

Look at How Frequently an ETF is Traded

Most large ETFs are traded very frequently. Investing in smaller ETFs that aren’t traded frequently could come with hidden costs. When researching an ETF, look at the median bid/ask spread of the fund. Less frequently traded funds will have a large bid/ask spread, which represents a hidden cost of trading that security.

ETF Premium/Discount

Since ETFs trade on open markets, the price of an ETF share fluctuates with supply and demand. ETFs can buy and sell underlying investments or work with institutional investors to keep their market prices in line with their underlying asset values, but most ETFs will trade at some premium or discount relative to their underlying values. Investing in ETFs that trade at stable premiums/discounts can ensure that you don’t incur additional variability when you buy or sell your ETF.

Review the Holdings of the ETF

Your brokerage will usually show you the largest security holdings of an ETF. Reviewing this list can give you an idea of both how well-diversified the fund is and whether its investments match your understanding of the fund’s objectives. 

For example, the Vanguard 500 Index Fund ETF’s (VOO) top 10 holdings indicate that the fund is heavily weighted toward the tech sector. If this does not align with your investment objectives, it might be a reason to find another fund.

ETFs vs. Other Investments

ETFs have advantages and disadvantages over other types of investments that you should consider as you build your investment portfolio. Here’s how ETFs compare to some other types of investments.

ETFs vs. Mutual Funds

Mutual funds also provide access to a diversified slate of investments, but they aren’t as easily tradeable as ETFs. Mutual funds may be better for long-term investors who can invest a substantial amount. They require a minimum investment and only trade once a day. The advantage of a mutual fund is that you can make periodic investments in fractional shares or fixed dollar amounts.

ETFs vs. Individual Securities

ETFs offer better diversification and more liquidity than buying some individual securities. When you buy individual company stocks, your entire investment depends on the fortunes of one company and you don’t get the return-smoothing effects of spreading your investment across several companies. 

Plus some types of securities, like U.S. Treasuries, can’t be redeemed for a certain period after investment or require an interest penalty if cashed in prematurely; an ETF can give you exposure to illiquid asset classes while maintaining liquidity.

ETFs vs. Robo-Advised Investing

Robo-advisors are a popular option for investors who don’t want to handle the complexity of selecting investments. With many robo-investing platforms, you simply set your investment objective, make your investment and let the robots do the rest. If you find an ETF with an investment objective that matches yours, an ETF can give you the advantage of a single investment and diversification, often at a lower cost.