Free Trial

Top 5 ETFs for Every Investor: From Semiconductors to Defense

ETF investment concept, Exchange Traded Fund, ETF stock options and stock market index fund, Growing Wealth in the Financial Market. — Photo

Key Points

  • ETFs provide diversification and ease of investment for beginning investors and advanced strategies, including leverage and long and short positioning for more experienced investors.
  • Some of the top ETFs to consider now include the VanEck Semiconductor ETF, the iShares MSCI Global Gold Miners ETF, and the Global X Defense Tech ETF.
  • When selecting an ETF, consider expense ratio, AUM, and trading volumes in addition to portfolio makeup and performance.
  • 5 stocks we like better than SPDR S&P 500 ETF Trust.

Exchange-traded funds (ETFs) have the potential to be an excellent choice both for amateur investors eager to diversify a portfolio but without the experience or time to deal with the regular management of a large number of positions as well as seasoned investors trading actively to capitalize on advanced leveraged strategies. It's no wonder that these easy-to-use investment vehicles have ballooned in popularity in recent years.

Before investing in an ETF, though, it's essential to understand the way that these funds are structured and the costs associated with them. In many cases, the fees associated with investing in an ETF—known as the expense ratio—have been driven lower by fierce competition from multiple providers offering similar products. At the same time, some funds may be quite expensive and use highly advanced strategies best suited to specialist investors.

Given thousands of different ETFs are available for investment, each investor will need to gauge their own goals and interests before comparing similar funds and making a selection. Niche funds may appeal to particular investment goals but may also offer low assets under management (AUM) or trading volume levels, which can cause liquidity and cost concerns. Fortunately, many ETFs are generally a good bet for investors of all experience levels.

VanEck Semiconductor ETF: Capitalize on the Chip Craze

VanEck Semiconductor ETF Today

VanEck Semiconductor ETF stock logo
SMHSMH 90-day performance
VanEck Semiconductor ETF
$256.69
+2.04 (+0.80%)
(As of 10/11/2024 ET)
52-Week Range
$136.10
$283.07
Dividend Yield
0.41%
Assets Under Management
$25.25 billion

Semiconductor stocks have had a tremendous run in recent months, with two leaders—NVIDIA Corp. NASDAQ: NVDA and Taiwan Semiconductor Manufacturing Co. Ltd. NYSE: TSM—now among the ten largest companies in the world by market capitalization. Still, as NVIDIA has demonstrated with its recent share price decline, investing in individual chipmakers carries risks despite the extreme popularity of many of these firms.

The VanEck Semiconductor ETF NASDAQ: SMH provides a greater degree of diversification within this industry than most investors are likely to achieve by targeting individual firms. This fund tracks 25 leading U.S.-listed semiconductor makers and offers a balance between megacap, large-cap, and mid-cap companies as a way of controlling risk.

With an expense ratio of 0.35%, SMH is moderately priced. To be sure, there are less expensive alternatives, but many of these are broader information technology sector funds that do not provide the same targeted exposure to semiconductor firms. SMH also has strong liquidity based on large monthly trading volumes, so investors are not likely to face any barriers entering or exiting this fund.

VanEck Semiconductor ETF (SMH) Price Chart for Sunday, October, 13, 2024

iShares MSCI Global Gold Miners ETF: Combat Inflation Without Direct Gold Exposure

iShares MSCI Global Gold Miners ETF Today

iShares MSCI Global Gold Miners ETF stock logo
RINGRING 90-day performance
iShares MSCI Global Gold Miners ETF
$33.33
+0.26 (+0.79%)
(As of 10/11/2024 ET)
52-Week Range
$20.18
$34.94
Dividend Yield
1.38%
Assets Under Management
$606.44 million

Gold is trading near an all-time high after reaching a record earlier this year, the likely result of lingering concerns about inflation, the potential for a recession, uncertainty about interest rates, and general hesitation about market volatility.

For some investors, physical gold is an ideal safe haven when faced with market turbulence. However, direct investments in gold also bring challenges including storage and maintenance, security, and liquidity. An arguably easier alternative in the ETF space is the iShares MSCI Global Gold Miners ETF NASDAQ: RING.

RING does not offer direct exposure to physical gold, but rather tracks a basket of nearly 40 international gold mining companies as a proxy for the price of gold. This structure allows for diversification across dozens of different companies as well as the potential for dividend income.

RING's expense ratio is fairly high compared to many ETFs at 0.39%, but it remains lower than many other funds in the gold mining category. Another major benefit it enjoys over multiple other gold miner ETFs is its international focus. Gold mining is an industry spread out throughout the world and in both developed and emerging markets, and RING's holdings provide a healthy mix of each.

iShares MSCI Global Gold Miners ETF (RING) Price Chart for Sunday, October, 13, 2024

Global X Defense Tech ETF: Benefit From Increased Defense Spending

Global X Defense Tech ETF Today

SHLDSHLD 90-day performance
Global X Defense Tech ETF
$38.22
+0.37 (+0.98%)
(As of 10/11/2024 ET)
52-Week Range
$25.03
$38.59
Dividend Yield
0.21%
Assets Under Management
$586.27 million

An unfortunate reality of increased geopolitical conflict in Ukraine and the Middle East is that many nations have accelerated the pace of growth of their defense spending. Global military spending for 2023 was $2.4 trillion, an increase of almost 7% over 2022.

In the niche category of defense technology funds, the Global X Defense Tech ETF NYSEARCA: SHLD stands out for its year-to-date returns above 31%. The fund is fairly focused, with fewer than 40 companies included, and it is limited to U.S. names.

Notably, SHLD is a smaller and less-liquid fund than some of the others in this list, with AUM of $522 million and a 1-month average trading volume in the 200,000s. It also has higher fees, with an expense ratio of 0.50%, and only about a year's track record since launch. Nonetheless, if current defense spending trends continue it seems likely that SHLD will provide strong returns.

Global X Defense Tech ETF (SHLD) Price Chart for Sunday, October, 13, 2024

Invesco S&P 500 Momentum ETF: Building on Current Trends

Invesco S&P 500 Momentum ETF Today

SPMOSPMO 90-day performance
Invesco S&P 500 Momentum ETF
$93.67
+0.97 (+1.05%)
(As of 10/11/2024 ET)
52-Week Range
$55.32
$93.70
Dividend Yield
1.01%
Assets Under Management
$2.69 billion

Investors not especially focused on a particular theme or sector but still wishing to capitalize on the latest momentum picks without actively managing their portfolios may turn to the Invesco S&P 500 Momentum ETF NYSEARCA: SPMO.

SPMO holds a portfolio of 100 stocks from the S&P 500 that have a history of leading share price growth compared with other companies in the index. By targeting companies with strong returns on this scale—and focusing on the well-established companies making up the S&P 500—this ETF mitigates much of the risk involved with investing in a single momentum stock.

Still, due to the shifting nature of momentum stocks, this fund tends to draw investors looking to trade ETFs fairly actively, as opposed to hands-off investors looking to buy and hold. Fortunately, its low expense ratio of 0.13% makes active trading possible without becoming too costly.

Invesco S&P 500 Momentum ETF (SPMO) Price Chart for Sunday, October, 13, 2024

Vanguard S&P 500 ETF: Inexpensive Exposure to Major Index

Vanguard S&P 500 ETF Today

Vanguard S&P 500 ETF stock logo
VOOVOO 90-day performance
Vanguard S&P 500 ETF
$532.71
+3.15 (+0.59%)
(As of 10/11/2024 ET)
52-Week Range
$375.95
$533.43
Dividend Yield
1.12%
Assets Under Management
$534.71 billion

The S&P 500 is up more than 22% in the year leading up to September 5, and while this level of return is not necessarily consistent, the market does trend upward over the long term. This makes funds tracking the S&P 500 a stalwart for many investors interested in the ETF space.

Among S&P 500 ETFs, there has been a race to provide the most enticing expense ratio, as funds targeting this benchmark index are in many other respects essentially equal. The Vanguard S&P 500 ETF NYSEARCA: VOO is not as well-known as its rival SPDR S&P 500 ETF Trust NYSEARCA: SPY, but it is quite a bit cheaper for investors. VOO has an expense ratio of 0.03%, while SPY's is three times that at 0.09%.

VOO has comparable AUM to SPY, but it does lag behind its rival in liquidity. Nonetheless, with a 1-month average trading volume of more than 5,000,000, VOO is not likely to give investors any liquidity concerns.

Vanguard S&P 500 ETF (VOO) Price Chart for Sunday, October, 13, 2024

Theme or No Theme

A decision ETF investors must make is whether to focus on funds with a particular investing theme, or instead to target those that provide broad-based exposure to larger indices or portfolios. The funds above provide a mixture of each and, together, represent a number of different approaches to ETF investment.

→ It’s over. (From Behind the Markets) (Ad)

Should you invest $1,000 in SPDR S&P 500 ETF Trust right now?

Before you consider SPDR S&P 500 ETF Trust, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and SPDR S&P 500 ETF Trust wasn't on the list.

While SPDR S&P 500 ETF Trust currently has a "hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

10 Best Stocks to Own in 2024 Cover

Click the link below and we'll send you MarketBeat's list of the 10 best stocks to own in 2024 and why they should be in your portfolio.

Get This Free Report
Nathan Reiff
About The Author

Nathan Reiff

Contributing Author

Fundamental analysis, ETFs, Consumer Staples

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
NVIDIA (NVDA)
4.8125 of 5 stars
$134.800.0%0.03%63.23Moderate Buy$142.46
Taiwan Semiconductor Manufacturing (TSM)
2.9664 of 5 stars
$190.81+2.7%1.03%34.13Moderate Buy$200.00
VanEck Semiconductor ETF (SMH)N/A$256.69+0.8%0.41%18.82N/AN/A
iShares MSCI Global Gold Miners ETF (RING)N/A$33.33+0.8%1.38%28.50N/AN/A
Global X Defense Tech ETF (SHLD)N/A$38.22+1.0%N/A27.32N/A
Invesco S&P 500 Momentum ETF (SPMO)N/A$93.67+1.0%1.01%20.66N/AN/A
Vanguard S&P 500 ETF (VOO)N/A$532.71+0.6%1.12%25.04N/AN/A
SPDR S&P 500 ETF Trust (SPY)N/A$579.58+0.6%1.21%N/AN/AN/A
Compare These Stocks  Add These Stocks to My Watchlist 


Featured Articles and Offers

ETF Battle: SPY or VOO – Which One Should You Buy?

ETF Battle: SPY or VOO – Which One Should You Buy?

Comparing S&P 500 ETFs: SPY and VOO. Thomas and Chris break down the key differences and similarities between these two giants in the ETF world.

Related Videos

Set It and Forget It: Top ETFs for Stress-Free Investing

Stock Lists

All Stock Lists

Investing Tools

Calendars and Tools

Search Headlines