ETFs are an attractive tool for diversifying your investment portfolio, reducing risks, and participating in the economic processes of different countries and industries. They have many advantages, such as high liquidity, transparency, flexibility in trading, and accessibility for a wide range of investors.
In this article, you will learn about the best ETFs to invest in 2024. You can learn more about investing and all about finance exchange with Rates.fm.
Best ETFs 2024
An ETF is a public investment fund that offers universal shares, consisting of shares of different companies, for sale on the stock exchange. Such securities can be managed in the same way as standard exchange assets, and their value depends on the market balance of supply and demand at a particular moment in time.
Emerging Markets ETFs
iShares MSCI Emerging Markets ETF (EEM). This fund includes stocks from companies in rapidly developing countries such as China, India, and Brazil. Investing in an ETF focused on emerging markets can be beneficial due to the high rates of economic growth, urbanization, and increasing purchasing power in these countries.
Sector ETFs Focusing on Renewable Energy
Alerian MLP ETF (AMLP). This ETF invests in master partnerships in the energy sector. AMLP focuses on more stable segments of the energy sector, such as transportation and storage.
Invesco Solar ETF (TAN). This investment fund includes companies whose activities are related to solar energy. As the development of projects to reduce carbon emissions and move to clean energy continues to gain momentum, this is a promising sector for investment.
First Trust Global Wind Energy ETF (FAN). This fund includes companies whose activities are related to the wind energy sector. This sector is one of the fastest growing in the field of renewable energy.
Technology ETFs
Global X NASDAQ 100 Covered Call ETF (QYLD). The fund tracks the NASDAQ-100 index and uses a covered call strategy, which allows it to further enhance returns through option premiums. Includes stocks in the information sector, biotechnology, and industrial innovation.
Technology Select Sector SPDR Fund (XLK). This ETF includes major technology companies such as Apple and Microsoft. The technology sector continues to be one of the most innovative and dynamically developing, which makes it attractive to investors.
ARK Fintech Innovation ETF (ARKF). Includes companies in the financial technology industry – mobile payments, digital and blockchain technologies (e.g. Block, Shopify, DraftKings, Robinhood Markets).
High Dividend Index Funds
Schwab U.S. Dividend Equity ETF (SCHD). The fund tracks the performance of the Dow Jones U.S. Dividend 100 index and has an annual yield of about 9.99%. SCHD provides stable income through investments in dividend stocks of American companies.
Vanguard Real Estate ETF (VNQ). The ETF focuses on the real estate sector and has a dividend yield of 4.1%. It includes REITs (real estate investment trusts), which are obliged to return a significant portion of their profits to shareholders, providing stable dividend payments.
SPDR S&P 500 ETF Trust (SPY). It tracks the S&P 500 index, which includes companies from various sectors of the economy: technology, healthcare, financials, consumer goods and services, energy, industrials, and others. It has $401 billion in capital under management, a low expense ratio (0.09%), deep liquidity, and tight spreads for investors.
Gold ETFs
SPDR Gold Shares (GLD). Investing in gold can serve as a hedge against inflation and market volatility. This ETF offers an easy way to include gold in your portfolio without having to physically own the precious metal. For example, Bank of America provides the opportunity to invest in Gold ETFs.
Investing in these ETFs can help diversify your portfolio and take advantage of growth opportunities across sectors and regions. However, it is always important to do your own research and consult with a financial advisor if necessary.
How to Сhoose The Right ETF?
Choosing the right ETF depends on a thorough analysis of several important aspects. Here are some specific tips to help you make an informed decision:
- Assess liquidity. Check the average trading volume of the ETF over the past few months. High trading volume ensures that you can buy or sell ETF shares quickly and at the market price. Make sure that the spread (the difference between the purchase and sale price) is not too wide, which also indicates good liquidity.
- Look at the performance history. Analyze the ETF’s returns over different periods: the last year, three years, five years. This will give you an idea of the fund’s stability and potential.
- Check the asset mix. Study what stocks or bonds the ETF includes. Make sure that the asset mix matches your investment goals and risk profile. Also, determine the degree of diversification of the ETF portfolio. Funds with broad diversification usually provide more stable and safe investments. The ETF is a great match for investments in bank gold, Bitcoin, or Tether cryptocurrency, which can be purchased on Binance or Coinbase, and other assets.
- Look at the structure and expenses. Choose funds with low fees, as even small differences in fees can have a significant impact on your long-term returns. Check if the ETF has additional fees or special terms that may affect your investment strategy.
Why Invest in ETFs?
Investing in ETFs offers many benefits that make them an attractive choice for a wide range of investors: accessibility, flexibility, liquidity, and transparency. We’ll cover them in more detail below:
- Accessibility: ETFs have a low barrier to entry, making them accessible even to novice investors.
- Flexibility: ETFs provide the ability to buy and sell at any time during the trading day, giving investors greater flexibility in managing their investments.
- Liquidity: Because the most popular ETFs are traded on major exchanges, they are highly liquid. This means that investors can easily buy and sell even a large position in an ETF without significantly affecting the market price.
- Transparency: Information about the asset composition and structure of the fund is updated daily. Investors can easily track what assets are contained in the ETF, which helps them better understand and control the composition of their portfolio.
Conclusion
One of the key advantages of ETFs is their ability to diversify. Investing in ETFs allows you to distribute investment risks across multiple assets, which significantly reduces dependence on the success of individual companies or industries.
