IntroductionOne of the investment funds is exchange traded funds or ETF’s. ETFs act like regular stock; they consist of portfolios of stocks, bonds, other funds, or combination. Most of the ETF’s are an index fund. This index fund typically track a specific index benchmark such as S&P 500 index, MSCI EAFE Index, Barclays Capital U.S. Aggregate Bond Index, etc.
You can choose many different classes of this fund. Some of them are emerging markets stock ETF, international stock ETF, technology sector ETF, inflation protected bond ETF, and more. You may need to pay for the brokerage fee if you are using a regular stock broker. Some online brokerages do provide free ETF’s for their customers.
Best ETF’s
These funds are selected based on its popularity among investors. They also provide low cost investment option for investors. You can find each fund review below.
Top 7 Exchange Traded Funds for 2013 are:
- SPDR S&P 500 (SPY)
- iShares MSCI EAFE Index (EFA)
- Vanguard MSCI Emerging Markets ETF (VWO)
- Vanguard REIT Index ETF (VNQ)
- SPDR Gold Shares (GLD)
- Vanguard Total Bond Market ETF (BND)
- iShares iBoxx $ High Yield Corporate Bond (HYG)
The investment objective of this SPDR S&P 500 ETF is to provide total return through investment corresponds to the price and yield performance of the S&P500 Index. It is also one of the oldest exchange traded funds and it is introduced to market on January 21, 1993. The total net assets are $96.64 billion. The current yield is 2.01%.
Morningstar has rated this large blend stock fund with 4 stars. It has returned 14.02% over the past 3 year, and 4.63% over the past decade. The year-to-date return is 6.35% (as of 6/12/2012). The top 3 stocks in its assets are Apple Inc, Exxon Mobil Corporation, and International Business Machines Corp.
2. iShares MSCI EAFE Index (Ticker: EFA)
This iShares MSCI EAFE Index fund invests majority of its assets to track the performance of the MSCI EAFE Index. This iShares fund is provided by BlackRock Investments LLC. This 3 star rated ETF has a dividend yield of 3.60%. The expense ratio is only 0.34%.
Categorized as foreign large blend stock fund, it has a 3 year annualized return of 3.25%. The average trading volume is 23.1 million per day. The top 5 sectors are financial services, industrials, consumer defensive, consumer cyclical, and healthcare.
Note: EAFE means European, Australasian and Far Eastern markets.
3. Vanguard MSCI Emerging Markets ETF (Ticker: VWO)
As an international stock fund, the Vanguard MSCI Emerging Markets ETF utilizes its assets to purchase stocks of companies domiciled in emerging markets around the world. The emerging market countries include China, Brazil, Russia, Taiwan, Indonesia, Korea, etc. It has $47 billion of total assets. The annual expense ratio is 0.20%.
This diversified emerging markets stock ETF has a 12-month yield of 2.39%. The annual portfolio turnover rate is 10.3%. The return on equity is 20%.
4. Vanguard REIT Index ETF (VNQ)
The Vanguard REIT Index ETF objective is to provide high potential for investment income and capital growth. This real estate fund uses its assets to buy stocks of real estate investment trusts (REITs), companies with real estate property. Its expense ratio fee is only 0.10% per year.
As of June 2012, the top 5 holdings are Simon Property Group Inc, Public Storage, Equity Residential, Ventas Inc, and HCP Inc. The top 3 sectors are Retails REITs, Specialized REITs, and Residential REITs. The average 5 year return is 1.54%.
5. SPDR Gold Shares (GLD)
The investment aim of the SPDR Gold Shares is to track the performance of the gold bullion price. The fund’s inception date is 11/18/2004. The fund trustee is Bank of New York. This exchange traded fund is traded at NYSE ARCA Exchange (New York Stock Exchange).
This precious metals commodities fund has $65.7 billion of total net assets. For buying this ETF, you may be charged with ordinary brokerage commissions.
6. Vanguard Total Bond Market ETF (BND)
The Vanguard Total Bond Market ETF invests in a diversified portfolio of U.S. investment grade bonds. This fund can be used to diversify the investment risks. Its expense ratio is 0.10%. This expense fee is one of the lowest fees in its category. The distribution rate is 3.04%.
This intermediate term bond fund has an average effective duration of 5.11 years. The average effective maturity is 7.20 years. It has returned 7% over the past 3 year, and 6.96% over the past 5 year.
7. iShares iBoxx $ High Yield Corporate Bond (HYG)
The investment objective of iShares iBoxx $ High Yield Corporate Bond fund is to provide high income by investing in a corporate bond market index compiled by Markit Indices Limited. It has a distribution yield of 7.31%. The weighted average maturity is 5.19 years.
This high yield bond fund has $13.8 billion of total net assets. The expense ratio is 0.50%. As of June 2012, the top 4 sectors are consumer services, oil & gas, financials, and telecommunication.
Disclosure: No Position
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