8 Best ETFs for February 2025 and How to Invest

ETFs, also known as Exchange-Traded Funds, have become increasingly popular, particularly among new investors, due to their simplicity and cost-effectiveness. They function like a basket of investments, enabling you to diversify your portfolio and be exposed to multiple assets with a single trade.

Investing in ETFs is a simple process. The first step is to open a brokerage account with a platform that offers ETF trading. Next, use a screener tool to identify a low-cost ETF that aligns with your investment goals. After selecting the right ETF, place your trade and regularly monitor your investment to stay on track with your financial objectives.

Consider your brokerage account as a gateway to the stock market. It's where you'll buy and sell ETFs. If you don't already have one, see our guide on brokerage accounts and how to open one. Many brokers make this process a breeze – it's often as easy as creating a bank account. Additionally, you can usually find brokers with no minimum balance requirements or pesky fees. Some traditional brokers you can consider are DBS Vickers, Tiger Brokers, Saxo Markets, as they offer extensive market access.

If you prefer a more automated experience, robo-advisors can be a great option. They'll build and manage an ETF portfolio tailored to your needs for a small annual fee. And since these robo-advisors give you curated investment portfolios, you may only be provided a limited option. But that's also part of its appeal since they already have options that are more aligned with your needs and preferences. Some of the top robo advisors to consider include Syfe, StashAway, and Endowus.

However, before investing in ETFs, it's essential to consider several key factors:

• Trading fees & commissions: Compare costs, especially between SGX-listed and international ETFs.

• Market access: Ensure your broker provides access to the ETFs you want to trade, whether on SGX, US exchanges, or other markets.

• Platform usability: Choose a brokerage with a user-friendly interface that suits your trading style.

• Comparison tools: Use our comparison tools to find the ETF that best suits your investment goals.

>> Want to compare what ETF options are suitable for you? Check out our list of the best brokers for ETF investors in Singapore.

Once your brokerage account is set up, the next step is selecting which ETFs to invest in. Whether you're looking for top-performing index ETFs or prefer to explore options independently, you can narrow down your ETF options to simplify the decision-making process.

Most brokerage platforms provide advanced screening tools that allow you to filter ETFs based on key criteria such as asset class, industry, region, trading performance, and fund provider. With thousands of ETFs available, using these filters can help you find investments that align with your goals. Consider applying the following factors to refine your search:

• Asset class: ETFs are grouped by the type of assets they hold, making it essential to opt for one that fits your investment strategy. If you want an ETF with higher growth potential, then you can consider equity ETFs. But it’s also important to remember that these are quite volatile. Then, there are the bond ETFs, which focus on fixed-income securities, so they provide stability and consistent returns. There is also the commodity ETF that tracks raw materials like gold and oil, serving as an inflation hedge. And lastly, the REIT ETFs offer exposure to real estate markets, generating rental income and diversification benefits.

• Geographical exposure: Deciding where you want your money to work is key to ETF investing. If you want to invest in Singaporean ETFs, these provide exposure to companies listed on the Singapore Exchange (SGX), reflecting the local economy. US ETFs offer access to the world's largest stock market, while Global ETFs provide broad diversification across multiple regions.

• ETF fund domicile: The fund’s domicile refers to the country where it is legally registered, which can impact tax efficiency and regulatory protections. Some investors prefer ETFs domiciled in tax-friendly jurisdictions to minimise withholding taxes on dividends and capital gains.

• Expense ratios and management fees: Expense ratios represent the annual cost of managing the fund. Since these fees reduce overall returns, choosing ETFs with lower expense ratios is beneficial. On average, ETF expense ratios range from 0.10% to 10%. Therefore, be sure to compare the expense ratios before deciding on an ETF.

• Trading fees: While many online brokers now offer commission-free ETF trades, some may still charge fees. Check if your brokerage provides commission-free options.

• Fund size: The fund size refers to the number of assets under management (AUM). When the size of an ETF is larger, this means there is more AUM, making it more stable and less prone to closure.

• Liquidity: Trading volume indicates how frequently an ETF is bought and sold. When a fund has higher liquidity, this generally means smoother transactions and tighter bid-ask spreads.

• Historical performance: While past performance doesn't guarantee future success, evaluating a fund’s three-, five-, or ten-year track record can provide insight into its consistency.

>> Still not sure about how investing in ETF works? Learn all about ETFs first.

Once you've chosen your ETF, the next step is executing the trade through your brokerage platform. Start by locating the ETF’s ticker symbol, a unique identifier used to place your order. 

Next, choose the order type—either a market order for immediate execution at the best available price or a limit order to buy at a specified price. Double-check all details, including the number of shares and transaction fees, before confirming the trade. Once executed, monitor your investment through your brokerage account to track performance and make informed decisions in the future.

To navigate the process smoothly, it’s essential to understand key trading terms—check out this breakdown of what you need to know.

It’s important to note that if you're investing in ETFs in Singapore, there are key factors to consider.

SGX-listed ETFs are traded in Singapore dollars (SGD) and follow local trading hours, making them more accessible to domestic investors. Meanwhile, overseas ETFs, such as those listed on US or European exchanges, trade in foreign currencies and may be subject to exchange rate fluctuations, impacting returns.

Additionally, overseas ETFs may have different tax implications and settlement periods compared to SGX-listed ETFs.

Understanding these differences helps you make better-informed investment decisions while managing potential costs and risks.

After purchasing your ETF, there's no need to track its performance consistently every day. Unlike individual stocks, ETFs are designed for diversification and long-term growth, making them ideal for a buy-and-hold strategy. While it's good to stay informed, constantly checking prices can lead to emotional decision-making and unnecessary stress. Instead, focus on your investment goals and evaluate your portfolio every now and then to ensure it remains aligned with your financial strategy.

If you do want to check on your ETF’s performance, you can easily do so through your brokerage platform, Google, or market tracking apps. These tools provide real-time price updates, historical performance data, and news that may impact the market.

However, rather than reacting to short-term price fluctuations, consider a long-term approach. Market volatility is normal, but staying invested over time often yields better results than trying to time the market.

For beginners looking to enter the world of investing, a great starting point is ETFs that are similar to major market indices like the S&P 500. These funds provide exposure to some of the country's top corporations, aiming for steady, long-term growth. When choosing an ETF, key considerations include risk level and expense ratio—lower fees help maximise overall returns over time.

To compile our selection, we focused on ETFs with lower expense ratios and portfolios consisting of leading companies. Leveraged and inverse ETFs were intentionally left out to maintain a focus on traditional investing strategies.

Check out our list of the top-performing ETFs:

These are the common types of ETFs available and how they work:

Stock ETFs refer to ETFs made up of a portfolio of stocks to track an index, such as the S&P 500 Index. One of the most popular ETFs available is the SPDR S&P 500 ETF, which is made up of the common stocks included in the S&P 500 index. The S&P 500 index consists of the largest 500 companies listed on stock exchanges in the US. 

Other examples of ETFs that track stock indexes include: 

• Invesco QQQ ETF that tracks the Nasdaq 100 Index

• SPDR Dow Jones Industrial Average ETF that tracks the Dow-Jones Industrial Average 

Bonds or fixed-income ETFs are made up of various types of bonds or fixed-income products. They are a low-risk asset class that usually appeals to risk-averse investors. While bonds generally have lower returns when compared to stocks, they offer stability to a portfolio with their steady and fixed interest payments. 

Examples of bond ETFs include: 

• ABF Singapore Bond Index Fund

• Nikko AM SGD Investment Grade Corporate Bond ETF

Commodities can be a good hedge against inflation, and they are, at times, correlated to other asset classes, such as stocks and bonds. Commodity ETFs consist of a wide range of commodities like gold, silver and oil. They can also include companies that produce agricultural products like corn, grain and livestock.

Examples of commodity ETFs include: 

• SPDR Gold Shares ETF

• iShares Silver Trust

• iShares MSCI Global Agriculture Producers ETF

If you are looking to invest in a specific sector, such as real estate, healthcare, technology or energy, you can invest in an ETF instead. An example is Real Estate Investment Trusts (REITs) – with dozens of REITs available on the SGX; many investors are spoiled for choice. Instead of taking the time to analyse and cherry-pick your REIT winners, you can consider investing in the entire sector with a REIT ETF.

REIT ETFs include:

• NikkoAM-Straits Trading Asia Ex-Japan REIT ETF 

• Phillip SGX APAC Dividend Leaders REIT ETF

• Lion-Phillip S-REIT ETF

Beyond REITs, there are also other ETFs available, such as the Invesco China Technology ETF, which specifically tracks technology stocks in China. Meanwhile, the Vanguard Health Care ETF consists of stocks involved in medical or healthcare products, services, technology, or equipment.

ETFs are also a way to increase your exposure to a country's market. For example, if you're looking to start investing in Singapore stocks, you can consider an ETF that tracks the STI, such as the SPDR STI ETF or the Nikko AM Singapore STI ETF.

Alternatively, you can gain exposure to popular overseas markets such as the US and China with ETFs that track their markets. Examples include:

• SPDR S&P 500 ETF

• iShares MSCI China ETF

Check out this list of pages of the top-performing ETFs in various categories:

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

• Best ETFs In Singapore For Tracking Stocks, Bonds And REITs

• Guide To Real Estate Investment Trusts (REITs), And Whether You’re Ready For It

• Best Robo Advisors To Auto-Pilot Your Investments In Singapore

• SPDR STI ETF vs Nikko AM STI ETF: A Comparison In A Jiffy

Investors are compelled to invest in ETFs because of their simplicity, relative affordability, and access to diversified products. Other benefits include:

ETFs are a great way to ease yourself into investing if you’re not confident in individual stock picking. With an ETF, you gain exposure to a basket of stocks, bonds or other asset classes depending on the ETF you invest in.

This helps diversify your portfolio at a low cost. Furthermore, diversification helps you to reduce your investment risk by not having all your eggs in one basket

One of the key benefits of ETFs is their transparency. Most ETFs publicly disclose their holdings on a daily basis, enabling investors to track their asset allocation in real-time. This level of visibility is a stark contrast to mutual funds, which typically update their holdings on a monthly or quarterly basis. Transparency allows investors to make informed decisions and avoid exposure to industries or companies they may not want to invest in.

ETFs generally offer a tax advantage over mutual funds. Because they are structured to minimise internal trading, investors are less likely to incur capital gains taxes unless they sell their shares. In contrast, mutual funds often trigger taxable events due to frequent asset turnover, even if the investor does not sell their holdings. ETFs provide more control over when and how taxes are paid, making them a more tax-efficient investment option.

ETFs are traded on the open market. This makes them highly liquid, as investors can choose to buy and sell the ETF at any time. All that’s required for you to purchase an ETF is a brokerage account and your Central Depository (CDP) account.

With an ETF, you can invest in top companies at a fraction of the price without having to meet minimum investment amounts.

For example, the STI ETF today ranges around S$3.93, while a single stock of a company within the STI, like DBS, stands at about S$46.68. The same applies to other markets.

From a cost perspective, it could be more expensive for an investor to purchase these individual stocks to make up their own portfolio than purchasing a bucket of stocks in a single ETF.

With thousands of ETFs available on the market, you can choose ETFs from different asset classes, geographies, industries, countries and stock exchanges. How you select your ETFs would depend on your investment goals, preferences and what’s in your current investment portfolio.

While ETFs may be great for some investors, they may not be suitable for others. These are some of the drawbacks of investing in ETFs:

While ETFs are known for their low-cost structure, they may still carry hidden expenses. Some brokerage platforms charge trading commissions, which can add up, especially for frequent traders. Additionally, while expense ratios for ETFs tend to be lower than mutual funds, some specialised or actively managed ETFs may have higher fees.

The ease of buying and selling an ETF depends on its trading volume. Highly liquid ETFs, such as those tracking major indices, are generally easy to trade. However, niche or less popular ETFs with lower trading volumes may be harder to sell quickly without affecting the price, potentially leading to larger bid-ask spreads.

ETFs can shut down if they fail to attract enough investors or assets to sustain operational costs. If an ETF closes, investors are forced to liquidate their holdings earlier than planned, potentially incurring losses or tax consequences. While closures are more common among newly launched or niche ETFs, it is still a risk to consider when selecting an investment.

Related links

SPDR STI ETF vs Nikko AM STI ETF: A Comparison In A Jiffy

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

Best ETFs In Singapore For Tracking Stocks, Bonds And REITs

How to Build a Passive Income Portfolio Using ETFs (And Why You Should)

This Is One S&P 500 ETF You Might Want To Avoid

Guide to Value Investing, and Why You Should Consider Value ETFs

4 Investing Strategies To Navigate Singapore’s Stock Market

Building A S$100,000 Net Worth By 30: Is It Possible?

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