In case you haven't been paying attention, the stock market has been on fire lately. The S&P 500, which includes 500 of America's biggest companies that together make up about 80% of the total U.S. market's value, was recently up nearly 18% year to date. (Over long periods, the S&P 500's average annual gain is closer to 10%.) And that's on top of a 26% gain in 2023.
If you're kicking yourself for having missed it, it's not too late to jump into the stock market -- even though, as always, it might drop sharply tomorrow or next year. It might not, though, and the S&P 500 is fully capable of posting gains for multiple years in a row. Thus, the key is to plan to remain invested for many years -- to be a long-term investor.
Image source: Getty Images.
Whether you missed out on the recent bull market or have been enjoying it, here are seven exchange-traded funds (ETFs) to consider. Each has a reasonable expense ratio, which is its annual fee, and each has an admirable track record. (Of course, part results don't dictate future results -- it all depends on each ETF's holdings and how well they perform going forward.) I've ranked them by their five-year average annual returns.
|
ETF |
Expense Ratio |
Five-Year Avg. Annual Return |
10-Year Avg. Annual Return |
15-Year Avg. Annual Return |
|---|---|---|---|---|
|
SPDR S&P 500 ETF (SPY) |
0.095% |
15.15% |
12.92% |
15.19% |
|
Fidelity Cloud Computing ETF (FCLD) |
0.39% |
N/A* |
N/A* |
N/A* |
|
Vanguard Growth ETF (VUG) |
0.04% |
19.25% |
15.72% |
17.30% |
|
iShares US Home Construction ETF (ITB) |
0.40% |
21.43% |
15.59% |
17.73% |
|
Vanguard Information Technology ETF (VGT) |
0.10% |
23.80% |
21.26% |
20.83% |
|
Technology Select Sector SPDR ETF (XLK) |
0.09% |
25.29% |
21.27% |
20.59% |
|
VanEck Semiconductor ETF (SMH) |
0.35% |
38.99% |
28.48% |
25.66% |
Data source: Morningstar.com, as of July 10, 2024.
*This fund is new, started in 2021.
Here's why each of them is included in this list:
- The SPDR S&P 500 ETF (SPY -0.01%) is here partly for comparison purposes, so that you can compare each fund's performance with the approximate market average. It's also a perfectly solid ETF to consider for your portfolio, though the similar Vanguard S&P 500 ETF (VOO) has a lower annual fee.
- The Fidelity Cloud Computing ETF (FCLD -0.22%) is here because cloud computing is a rapidly growing part of the technology sector. If you are bullish on cloud computing's future, consider parking some dollars in this fund. Expect volatility, though (as you might for many of these ETFs) -- it fell by 41% in 2022, and gained 53% in 2023. Its top holdings recently were Oracle, Intuit, and Microsoft.
- The Vanguard Growth ETF (VUG 0.16%) is here because it's a solid ETF that contains all the "Magnificent Seven" stocks along with nearly 200 others -- and with about 40% of its assets in technology businesses. Its top holdings recently included Microsoft, Apple, and Nvidia.
- Real estate is a cyclical industry, its fortunes generally rising and falling along with prevailing economic conditions. If you're bullish on near-term prospects for real estate, the iShares US Home Construction ETF (ITB 0.74%) should interest you. Its top holdings recently were D.R. Horton, Lennar, and NVR.
- The Vanguard Information Technology ETF (VGT -0.25%) is another technology stock-focused ETF, with Microsoft, Apple, Nvidia as recent top holdings. Just about all of its holdings are classified as in the technology sector.
- The Technology Select Sector SPDR ETF (XLK -0.03%) also has just about all of its assets solely in technology-sector stocks, with the usual suspects as top holdings: Microsoft, Nvidia, and Apple. Microsoft and Nvidia are weighted extremely highly in the fund, at about 22% and 20% each, respectively.
- Finally there's the VanEck Semiconductor ETF (SMH -0.51%) one of several terrific semiconductor-focused ETFs to consider. (Two others are the iShares Semiconductor ETF (SOXX) and the SPDR S&P Semiconductor ETF (XSD).) This ETF's top holdings recently were Nvidia, Taiwan Semiconductor Manufacturing, and Broadcom. Its outsized performance is due to many semiconductor stocks being on a tear in recent years.
Look these ETFs over and see which ones appeal to you most and which ones might be a good fit for your portfolio. Understand that after posting some solid gains for a few years, any of them might take a breather or pull back for a bit. But over the long term -- many years -- each has solid growth potential.
It's rarely worth looking backward to lament missing any bull market -- just look forward for which investments seem poised to perform well for you from now on.
