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4 ETFs you can’t live without in 2022

  • # stocks

  • # etfs

  • Published: Nov 07, 2022

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Exchange-traded funds, or ETFs, can be an excellent entry point for new investors and those looking to diversify their portfolios for long-term growth.

Like bonds, ETFs can hold multiple securities and provide exposure to a wide range of shares or bonds within one investment offering. Since they’re relatively cheap and carry lower risk than individual stocks, ETFs may be the right vehicle for investors who favor the buy-and-hold strategy.

Unlike bonds and mutual funds, ETFs trade on an exchange like a stock, making them very easy to sell and buy with generally low internal expenses.

While there are quite literally thousands of ETFs to choose from, here are some of the top ones that cover various market segments:

 

1. Invesco QQQ trust

Among the best-known ETFs, Invesco tracks the Nasdaq-100 Index, which includes the 100 largest non-financial companies listed on the Nasdaq based on market capitalization.

Based on total return over the past 15 years, the exchange-traded fund is rated the best-performing large-cap growth fund (1 of 317).  In the U.S., it is also the second most traded based on the average daily volume traded as of 31 March 2022.

With a single investment, you’ll gain access to blue-chip companies, including Apple, Amazon, Microsoft, Tesla, and many more.

 

2. The Vanguard S&P 500 ETF (VOO)

Since investors cannot invest in an index, the goal of the Vanguard S&P 500 ETF (VOO) is to track and mirror the returns of the S&P 500 index.

The fund appeals to investors because it is well-diversified and made up of equities of 500 of the largest U.S. publicly traded companies.  With a solid track record of profitability compared to smaller companies, these stocks tend to be more stable and offer investors a high potential for investment growth.

Launched in 1975, The Vanguard Group, based in Malvern, Pennsylvania, is among the world’s largest equity and fixed income managers.

3. iShares core MSCI EAFE ETF (IEFA)

IEFA delivers exposure to developed-market stocks in Europe and Asia, excluding the U.S. and Canadian equities, covering about 98% of global equity markets outside of North America.

The fund is the cheaper, younger variation of BlackRock’s flagship iShares MSCI EAFE ETF (EFA), which debuted in 2012 as part of an ultra-low-cost iShares Core series designed to attract buy-and hold investors.

With the low expense ratio of 0.07%, investors can benefit from this ETF as it offers a low-cost way to add some international exposure to portfolios and benefit from the long-term growth of the global economy.

4. The fidelity quality factor ETF (FQAL)

The fund, which owns about 125 securities, tracks a proprietary index that selects U.S. stocks based on factors like higher profitability, a good balance sheet, and stable cash flows.

Recently the CFRA awarded the fund a five-star rating based on a combination of its risk, reward, and cost attributes and using portfolio-level and fund-specific analysis.

FQAL has higher reward potential and incurs less risk than its high-quality peers. Thus, the fund may appeal to investors looking to combine a quality-focused approach with a U.S.-specific methodology.

Begin Investing

The ETF space has grown tremendously in recent years, reaching $4 trillion in invested assets by 2019.  It is estimated that, in 2020, there were 7,602 individual ETFs listed globally.

Luckily, investing in ETFs has become increasingly easy with multiple platforms available to traders, of which most offer low commission trading. ETFs trade through both online and traditional brokers, while a brokerage account enables investors to trade shares of ETFs just as they would trade shares of stocks.

Use our online tools to select the broker best suited to your needs, and start investing today.