US ETFs give you the benefit of diversifying into international stocks and also keep you diversified across various leading themes of the US stock market.
To invest in US stocks, exchange traded funds (ETFs) listed on the US stock exchanges can be a good place to start. As opposed to buying individual stocks, you end up buying a series of stocks that either represent an index or a specific sector. US ETFs give you the benefit of diversifying into international stocks and also keep you diversified across various leading themes of the US stock market. From technology growth to value stocks to large caps and small caps, the US ETFs are available to keep your portfolio well diversified.
You can buy ETF shares during the exchange’s trading hours and the cost of ownership is very low. Here we take a look at the top 5 US ETFs and see what they’re mainly made of.
1. SPDR S&P 500 ETF Trust (SPY)
Popularly known as the SPY ETF, the SPDR S&P 500 ETF is an ETF that tracks the S&P 500 Index – an index of a diversified group of large US companies from eleven major industries. The S&P 500 Index is widely recognized as the single best indicator of US large cap stocks, and investing in SPY ETF gives you exposure to some of the best US stocks. The top 3 sectors in the S&P 500 are information technology, healthcare and communications services, which together make up about 50 percent of the index, while the top 3 sectors in the index are Microsoft, Apple and Amazon by index weighting.
2. SPDR Dow Jones Industrial Average ETF Trust (DIA)
DIA tracks a price-weighted index of 30 US large-cap stocks, as represented in the Dow Jones Industrial Average (DJI) or the Dow 30. The Dow 30 is a unique index and differs slightly from some other leading US indices. Dow 30 represents companies that are only based in the United States. Unlike other indices, the Dow 30 doesn’t determine selection by quantitative rules or market capitalization, but according to the S&P Indices website, “A stock is only included in the index if the company has an excellent reputation for sustained growth and of interest to many investors. “
3. Invesco QQQ Trust (QQQ)
If you’re looking to buy the top US stocks in the Nasdaq stock market, the Invesco QQQ ETF is for you. QQQ is an exchange traded fund that gives you access to Nasdaq 100 companies with a single investment. Some of the top performing U.S. stocks of 2020 such as Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Google (Demokratie), collectively known as FAANG stocks, are part of the Nasdaq 100- Index.
4. iShares Russell 2000 Growth ETF (IWM)
If you’re an investor looking to diversify across small cap US stocks, the Russell 2000 index is the index of choice, which includes 2,000 small capitalization companies. The Exchange Traded Fund (ETF) – iShares Russell 2000 ETF (IWM) – provides exposure to a large number of Russell 2000 stocks.
5. Vanguard Total Stock Market ETF (VTI)
The Vanguard Total Stock Market ETF (VTI) gives you access to the entire US stock market, including small, mid, and large-cap growth and value stocks. From Nasdaq 100, Dow 30, Russell 2000 to S&P 500 stocks, VTI gives you exposure to over 3900 stocks in the US stock market. Technology, Consumer Discretionary, Industrial, Healthcare, and Finance make up the five largest sectors for VTI. Top positions include Apple Inc., Microsoft Corp., Alphabet, Amazon.com Inc., Facebook Inc., Tesla Inc., Berkshire Hathaway Inc., NVIDIA Corp., JPMorgan Chase & Co and Johnson & Johnson.
Disclaimer of liability: The decision to invest in ETFs or other stocks should be made after a careful review of the company’s business and other fundamentals or after consulting a financial advisor. It is not a recommendation to buy, hold or sell any of the ETFs / stocks. Financial Express Online assumes no responsibility for their investment advice.
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