The exchange traded funds (ETFs) registered on the US stock markets can be an useful place to start investing in US stocks. Instead of buying individual companies, you wind up purchasing a group of equities that either reflect an index or a certain sector. US ETFs give you the benefit of diversifying in foreign stocks while also maintaining your diversification across several hot topics on the US stock market. The US ETFs are available to maintain your portfolio well-diversified, covering everything from technological growth to value stocks to large-caps to small-caps. ETF units are available for purchase throughout the stock exchange’s trading hours, and their ownership costs are comparatively inexpensive. Here, we examine the top 5 US ETFs to determine their main components.
A pooled investment security called an exchange-traded fund (ETF) functions very similarly to a mutual fund. ETFs often follow a certain sector, index, commodity, or other asset, but unlike mutual funds, they can be bought or sold on a stock exchange just like conventional stocks. Anything from the price of a single commodity to a sizable and varied group of securities can be tracked by an ETF. ETFs may even be designed to follow particular investment strategies. The SPDR S&P 500 ETF (SPY), which replicates the S&P 500 Index and is still an actively traded ETF today, was the first ETF.
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 picks in terms of weight.
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.
Invesco QQQ Trust (QQQ)
The Invesco QQQ ETF is the one to buy if you want to purchase the best US stocks listed on the Nasdaq stock exchange. With just one investment, you can gain access to all Nasdaq 100 businesses thanks to the exchange-traded fund QQQ. The Nasdaq 100 index includes some of the best-performing US stocks of 2020, including Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Google (GOOGL), commonly known as the FAANG stocks.
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).
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.
DISCLAIMER: After carefully assessing the business and other fundamentals of the company, or after contacting one’s financial counsellor, one should decide whether to invest in ETFs or any other stock. It is not a suggestion to purchase, hold, or sell any of the stocks or ETFs. Their investment advice is not under the control of Financial Express Online.