Best US Exchange Traded Funds (ETFs) To Invest In (2021)

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Every spending situation is unique. SingSaver assembles the 'Best For' list, so you can decide what’s best for you.

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Gain exposure to the likes of Amazon, Apple, Microsoft, Tesla and more with the purchase of a single exchange traded fund. Here are the US ETFs you can consider adding to your portfolio. 

 

The United States may be the ‘land of opportunities’ when it comes to investments as well, and you’re itching to get your feet wet. But newbies to investing, one prerequisite: you might want to first check out, this full guide to exchange traded fund (ETF) to understand how it works. 

 

TL;DR An ETF is a low-cost fund that consists of a basket of securities, seeking to track the performance of an index. Investors can buy and sell an ETF directly off the stock market.

We’ve previously covered the best ETFs in Singapore for stocks, bonds, REITs and more. However, the grass might be greener on the other side of the globe in terms of growth, price movement and market size. 

We examine  11 US ETFs you can invest in, by their underlying companies, expense ratios, assets under management (AUM) and more. 

• Investing in the US market 
• Tracking the S&P 500 
• Tracking the Nasdaq 
• Dividends 
• Investing in technology 
• Sustainable investing

Best for investing in the overall US market

Vanguard Total Stock Market (VTI)

• AUM: US$1.1 trillion (as of 31 Jan 2021)
• Expense ratio: 0.03% (as of 28 April 2020)
• Top holdings include: Apple, Microsoft, Amazon, Alphabet, Facebook

If you’re looking for a single, well-diversified ETF to gain wider exposure to the US market, it is an option to study and explore. 

VTI is a low-cost ETF that includes not just your large, well-known stocks, but also mid and small cap equities from multiple different sectors. It seeks to track the performance of the CRSP US Total Market Index — a index that measures the investable US equities market.

As of 31 Jan 2021, VTI holds more than 3,600 stocks and has a huge AUM of US$1.1 trillion. Big names include Apple, Microsoft, Amazon and Alphabet, with the top 10 holdings making up 23.6% of the fund. 

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Best for tracking the S&P 500

The S&P 500 is an index that represents the 500 largest companies listed on the US markets. It offers high potential for investment growth over the long term. 

Vanguard S&P 500 ETF (VOO)

• AUM: US$630.7 billion (as of 31 Jan 2021)
• Expense ratio: 0.03% (as of 28 April 2020)
• Top holdings include: Apple, Microsoft, Amazon, Alphabet, Facebook

VOO invests in stocks in the S&P 500 Index, with the aim of tracking the index’s returns. As of 31 Jan 2021, it contains 509 stocks, with the top 10 largest holdings comprising 29% of the fund. 

Investing in VOO is akin to investing in the 500 largest companies in the US. This gives investors a great degree of diversification, as the companies span different sectors, including information technology, healthcare and financials. Over the past 10 years, as of 28 Feb 2021, VOO’s average annual returns stand at 13.39%.

SPDR S&P 500 ETF (SPY) 

• AUM: US$336 billion (as of 1 Mar 2021)
• Expense ratio: 0.0945% 
• Top holdings include: Apple, Microsoft, Amazon, Alphabet, Facebook

Much like VOO, SPY also tracks the S&P 500 index, holding 505 stocks. As of 31 Jan 2021, over the past 10 years, SPY’s returns stand at 13.36%. 

VOO and SPY are highly identical, both tracking the S&P 500 and having similar holdings. Where VOO stands out is its lower expense ratio and larger fund size compared to SPY. 

Best for investing in the NASDAQ

Invesco QQQ ETF (QQQ)

• AUM: US$155 billion as of 3 Jan 2021
• Expense ratio: 0.20%
• Top holdings include: Apple, Microsoft, Amazon, Tesla, Alphabet, Facebook

Invesco QQQ is an ETF that tracks the Nasdaq-100 Index. The Nasdaq-100 features the 100 largest non-financial companies listed on the Nasdaq. This allows you to invest in companies beyond the financial sector, such as those in the fast-growing technology sector. In fact, the Nasdaq-100 is tech-heavy — perfect for investors looking to ride on the technology wave.

Besides your usual FAANG stocks, you can also find other tech stocks such as NVIDIA, PayPal and Intel in QQQ’s portfolio.

Invesco NASDAQ Next Gen 100 ETF (QQQJ)

• AUM: US$1.119 billion as of 3 Jan 2021
• Expense ratio: 0.15%
• Top holdings include: Roku, Crowdstrike Holdings, ViacomCBS, The Trade Desk, Etsy

QQQJ offers a way to invest in the next 100 best stocks after the 100 largest stocks on the Nasdaq. QQQJ aims to track the Nasdaq Next Generation 100 Index, investing at least 90% of its total assets in the 101st to the 200th largest companies listed on the Nasdaq. 

As the ETF invests in the next 100 largest stocks on the NASDAQ, you can expect to see lesser known, mid-cap stocks as part of its holdings. 

Best for dividends 

Investors that are looking for dividends rather than capital gain can consider these ETFs.

Schwab U.S. Dividend Equity ETF (SCHD)

• AUM: US$18.992 billion as of 3 Jan 2021
• Expense ratio: 0.06%
• Top holdings include: Exxon Mobil, Texas Instruments, 3M, Coca Cola, Pepsico

Looking to track the total return of the Dow Jones U.S. Dividend 100™ Index, SCHD drills down into a list of about 100 holdings that is focused on the quality and sustainability of dividends. Outside of its top 10 holdings, it also includes stocks such as drugmaker Pfizer. Currently no single stock makes up more than 5% of their holdings. 

One of the cheapest dividend ETFs, SCHD charges 0.06% p.a. in fees. Its 30-day SEC yield is 3.44% as of 26 Feb 2021. 

Vanguard High Dividend Yield ETF (VYM)

• AUM: US$40 billion as of 31 Jan 2021
• Expense ratio: 0.06%
• Top holdings include: Johnson & Johnson, JPMorgan Chase & Co., Procter & Gamble Co., Bank of America Corp.

VYM tracks the FTSE High Dividend Yield Index — an index characterised by high dividend yielding stocks. Other names in the top 10 holdings of VYM include Intel, Verizon Communications, Comcast, AT&T, Pfizer and Walmart.

Much like the SCHD, it has a low expense ratio of 0.06%, with a 30-day SEC dividend yield of 3.17% as of 31 Jan 2021. However, unlike SCHD that holds about 100 stocks, VYM holds more than 400 stocks, of which many overlap with SCHD. 

Best for investing in technology 

ARK Innovation ETF (ARKK)

• AUM: US$17.68 Billion
• Expense ratio: 0.75%
• Top holdings include: Tesla, Square, Roku, Teladoc, Baidu, Spotify

We can’t talk about innovation ETFs without talking about ARK Innovation ETF, the hottest ETF that shot Ark Invest’s founder, CEO and CIO Cathie Wood to fame in 2020.

ARK Innovation ETF looks to invest in disruptive innovation. Companies within ARKK include those that fall under the categories of genomic revolution, industrial innovation, next generation internet or fintech innovation. It currently consists of more than 50 stocks, of which Tesla makes up more than 10% of the fund. 

The expense ratio for ARKK is higher than the other ETFs listed on this list. A key differentiating factor is that this is a fund that is actively managed (rather than passively managed), seeking long-term growth of capital.

Vanguard Information Technology ETF (VGT)

• AUM: US$46.4 billion as of 31 Jan 2021
• Expense ratio: 0.10%
• Top holdings include: Apple, Microsoft, NVIDIA, Visa, Mastercard, PayPal

VGT holds 345 stocks in the technology sector. More specifically, sectors such as technology hardware, systems software, semiconductors, application software and more. 

While VGT doesn’t include big names such as Alphabet or Facebook, it still includes Apple and Microsoft. As it is market cap weighted, its top 10 holdings make up more than half of the fund. Besides the stocks listed above, the top 10 holdings also include Intel Corp, Adobe, Salesforce and Cisco Systems.

Best for sustainable investing

Sustainable investing, or ESG (Environmental, Social and Governance) investing, has been gaining in popularity. If you’re an investor looking to make investments that are responsible, ethical and sustainable, consider the following ETFs.

Vanguard ESG U.S. Stock ETF (ESGV)

• AUM: US$3.2 billion as of 31 Jan 2021
• Expense ratio: 0.12%
• Top holdings include: Apple, Microsoft, Amazon, Alphabet, Facebook, Tesla

ESGV aims to track the performance of the FTSE US All Cap Choice Index, with its holdings screened for certain ESG metrics. More specifically, it excludes sin stocks such as alcohol, tobacco, weapons, fossil fuels, nuclear power, adult entertainment and gambling. It can also exclude stocks if they fail to meet standards of U.N. global compact principles, or if they do not meet certain diversity criteria.

Currently, ESGV contains 1461 different holdings, with the 10 largest companies making up 28% of the portfolio. Top holdings in ESGV include big names like Apple and Amazon, appealing to investors that still prefer holding onto these market leading stocks. It also includes Visa, Procter & Gamble Co., UnitedHealth Group and other mid to small cap stocks.

iShares MSCI Global Impact ETF (SDG)

• AUM: US$404 million as of 2 Mar 2021
• Expense ratio: 0.49%
• Top holdings include: Tesla, Umicore, East Japan Railway, Vestas Wind Systems, Kimberly Clark Corp

The SDG tracks the MSCI ACWI Sustainable Impact Index — an index that consists of companies that aim to derive majority of their revenues from products and services that address environmental and social challenges. The index also excludes companies that fail to meet minimum ESG standards. 

As such, SDG consists of more than 140 companies from around the world, including US, Japan, United Kingdom, China, Denmark, France and more. This ETF has reaped returns for its investors, with the average annual returns over three years at 18.05% as of 31 Jan 2021. 

Get your slice of the ETF pie 

If you’ve set your sights on a particular ETF, you can make the purchase directly with a brokerage account that gives you access to the US markets. The beauty of an ETF is that it is relatively affordable for the average investor, whereby the purchase of a single unit could give you the diversification you need.

Alternatively, if you prefer a more passive approach, whereby selecting an ETF isn’t necessary, you can consider investing with a robo-advisor. Many robo-advisors invest in a portfolio that is made up of various ETFs depending on your risk appetite and financial goals. Check out the best robo-advisors here. 

Read these next: 
Investing In Exchange Traded Funds (ETFs): A Newbie’s Guide To Getting Started
Best ETFs In Singapore For Tracking Stocks, Bonds And REITs
StashAway Review: Goal-Getting Investments Through ETFs
Best Brokerage Accounts To Start Your Investment Journey In Singapore
Money Confessions: 9 Singaporeans Share Their Portfolio Asset Allocation

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