How much time do you spend on the stock exchange?
Are you looking to invest in stocks or better yet, start trading?
If yes, then you might want to consider investing in Exchange Traded Funds (ETFs).
With U.S. markets being all the hype now, we highlight the 14 best U.S. ETFs for Singapore investors to select from.
Here are the 14 best U.S. ETFs for Singapore investors looking to diversify their portfolios.
|Best US ETFs||Ticker||What it Tracks||Expense Ratio|
|Best for Entire US Market|
|Schwab U.S. TIPS ETF||SCHP||Bloomberg U.S. Treasury Inflation-Linked Bond Index||0.050%|
|Vanguard Total Bond Market ETF||BND||The performance of Bloomberg Aggregate Float-Adjusted Bond Index||0.035%|
|Vanguard Total Stock Market ETF||VTI||The Investment results of the CRSP U.S. Total Market Index||0.04%|
|Best for S&P500|
|Vanguard 500 Index ETF||VOO||The S&P 500 Index through ownership of equities in the S&P 500.||0.03%|
|SPDR S&P 500 ETF Trust||SPY||Standard & Poor’s (S&P) 500 Index comprising top 500 large-cap and mid-cap company stocks in the U.S.||0.0945%|
|iShares Core S&P 500 UCITS ETF||CSPX||performance of the underlying index comprising 500 large-cap U.S. companies||0.07%|
|Best for NASDAQ|
|Fidelity NASDAQ Composite Index ETF||ONEQ||The performance of the Nasdaq Composite Index (COMP), a base index that represents Nasdaq-listed equities.||0.21%|
|First Trust Nasdaq Cyber security ETF||CIBR||The performance of the Nasdaq CTA Cyber Security Index||0.60%|
|Invesco QQQ ETF||QQQ||The Performance of the Nasdaq 100 Index by passively following the tech-heavy companies in the underlying index||0.20%|
|Best for Dow Jones|
|SPDR Dow Jones Industrial Average ETF Trust (DIA)||DIA||Dow Jones Industrial Average Index (DJIA) comprising large companies in the United States which must be selected by Wall Street Journal editors||0.16%|
|iShares Dow Jones Industrial Average UCITS ETF||CIND||Dow Jones Industrial Average Index (DJIA)||0.51%|
|Best for Dividends|
|Invesco KBW High Dividend Yield Financial ETF||KBWD||KBW NASDAQ Financial Sector Dividend Yield Index||0.10%|
|WBI Power Factor High Dividend ETF||WBIY||Solactive Power Factor High Dividend Index||0.70%|
|Other Notable US ETFs|
|Vanguard Total International Stock ETF||VXUS||The performance of the FTSE Global All Cap ex U.S. Index||0.17%|
Best for Entire US Market
1. Schwab U.S. TIPS ETF (SCHP)
Schwab U.S. TIPS ETF (SCHP) is an excellent Treasury-Inflation Protection Securities fund that offers exposure to a wide spectrum of the Treasury Inflation-Protected Securities or TIPS market at a lower fee.
Typically, these securities are linked to the Consumer Price Index or the CPI.
The ETF was started on 08/05/2010 and currently has over 342,000 shares. Equally, the ETF tracks the Bloomberg U.S. Treasury Inflation-Linked Bond Index (before fees and expenses), including those U.S. TIPS with at least one-year maturity.
The assets are weighted depending on their respective market value minus any funds held by the Federal Reserve.
Therefore, this mitigates the transaction costs, thereby ensuring easy tracking of the index.
Because the fund’s portfolio encompasses the whole of the TIPS maturity spectrum, it potentially courts a momentous amount of interest rate.
By October 2021, it had an average effective duration of 7.5 years, slightly higher than the benchmark of 6.5 years.
With a 0.05% expense ratio, the fund is performing well above the benchmark average by 29 basis points over a 10 year period.
Lastly, it has a Morningstar analyst rating of 5.0 out of 5.0, which is an excellent measure against ETFs past performance.
Notably, this is the highest rating by Morningstar.
2. Vanguard Total Bond Market ETF (BND)
The ETFs objective is to track the performance of a broad and market-weighted bond index. The fund tracks the Bloomberg Aggregate Float-Adjusted Bond Index, the underlying index.
It offers investors exposure to taxable investment-grade dollar-denominated bond markets, minus tax-exempt and inflation-protected bonds with maturities of at least one year.
In addition, BND has over 10,000 issues and delivers a broad portfolio at low fees.
Also, the fund offers a positive outlook for investment income, with share values expected to rise or fall modestly.
The fund is a good option for investors with a medium to long-term goals and those seeking a reliable revenue stream.
In addition, it’s suitable if you are seeking to broaden your horizons beyond stock risks in a portfolio.
Because it can be challenging to manage an extensive portfolio, this has resulted in tracking volatility.
Whereas the fund’s short-term prospects are not impressive, there’s a lot to applaud because it’s a fixed income ETF.
Furthermore, it’s well managed and owns a diversified portfolio of bonds. Like other Vanguard funds, it has managed to keep its expense ratio low at 0.35%.
Overall, the fund is an excellent option for investors looking for a stable and diversified US-investment grade fixed income coverage.
3. Vanguard Total Stock Market ETF (VTI)
This ETF tracks the investment results of the underlying index. In this case, the base index is CRSP U.S. Total Market Index which provides investors with an opportunity to stake in the entire U.S. equity market comprising small, mid-sized, and large-cap companies.
The fund’s objective is to offer investors a low-cost investment option and exposure to companies trading in the NASDAQ and NYSE.
Some unique characteristics of this fund include a lower expense ratio of 0.03% and total assets equal to an impressive $1.4 trillion.
The fund also has a wide exposure, with the highest being technology companies, consumer discretionary, and health care at 29%, 16%, and 12.8%, respectively.
As well, the stock holdings include Apple, Microsoft, Amazon, and Meta.
Best S&P 500 ETFs
4. Vanguard 500 Index ETF (VOO)
The fund invests in shares in the S&P 500 Index, representing the top 500 largest companies in the U.S.
Additionally, it tracks the S&P 500 Index through ownership of equities in the S&P 500.
It should be noted that the S&P 500 is a broad-based Index where investors stake their money in funds that mimic an index by owning stocks within the index.
The fund’s main objective is to track as closely as possible the index’s yield, which measures the overall returns.
Further, the ETF offers a high potential for investors funds to grow since the share value appreciates more steadily than ETFs that hold bonds.
Therefore, the fund is more suitable for investors targeting long-term growth.
In addition, the fund is attractive to investors mainly because of its diversification which consists of large-cap stocks.
Usually, these are stable with better performance and profitability than small-cap companies.
Examples of the top holdings include; Apple Inc. Microsoft Corp, Tesla Inc., Amazon.com Inc. and Meta (formally Facebook).
As you can see, these are some of the top companies in the U.S. and world.
5. SPDR S&P 500 ETF Trust (SPY)
The SPDR S&P 500 ETF Trust is a popular fund whose main objective is to track the Standard & Poor’s (S&P) 500 Index comprising top 500 large-cap and mid-cap company stocks in the U.S.
The fund fully mimics the S&P 500 index, holding underlying index members at their respective target weights.
Generally, the selection of these stocks depends on the industry, market size, and liquidity.
As earlier mentioned in the previous discussion, the S&P 500 is one of the significant base indexes in the U.S. equity market, which benchmarks the financial stability and health of the economy.
Another thing to note is that the fund’s top 10 holdings are technology companies like Amazon, Microsoft, and Apple.
The fund was established in 1993 with slightly above 6 million in assets.
Even though the initial years were a bit rough, it was able to weather the storm and currently has over $463 billion in assets.
With a diversified basket of assets, the SPY is listed on the NYSE and can be traded on different platforms.
Overall, the ETF has an expense ratio of 0.0945%, which offers investors a chance to own a single security at lower costs.
6. iShares Core S&P 500 UCITS ETF (CSPX)
The CSPX ETF tracks the performance of the underlying index comprising 500 large-cap U.S. companies. It offers investors exposure to some of the largest establishments in the U.S.
In addition, these companies are primarily multinationals, and therefore the stocks are exposed to global factors. It’s a good choice if you are looking to grow your portfolio over a long period.
Naturally, when investing, you want a fund with the lowest fees. Even though it’s not the lowest, CSPX has a lower 0.07% expense ratio.
Another noteworthy feature of CSPX is that it’s an ACC ETF. This means the dividends are reinvested and, therefore, more convenient for investors looking to accumulate wealth over a long time.
As well, because it’s an ACC ETF, it doesn’t have a dividend yield. Fortunately, it has tax benefits because it is domiciled in Ireland.
For Singapore investors, it’s important to note that this is a good choice because the fund’s dividends are exposed to a 30% withholding tax.
By contrast, Irish-based ETFs funds are exposed to 15% withholding tax and therefore have the edge over the US-domiciled options.
Best for NASDAQ
7. Fidelity NASDAQ Composite Index ETF (ONEQ)
The ETF seeks to offer investment returns that replicate the price and yield performance of the Nasdaq Composite Index.
In short, it tracks the Nasdaq Composite Index (COMP), a base index that represents Nasdaq-listed equities.
Notably, the underlying Index has had a remarkable record over the years.
For example, its price-yield basis increased by 536.7% from 2009.
Although it trailed the Nasdaq-100 performance, it outperformed other returns of other indexes such as S&P and MSCI World Index.
The NASDAQ Composite Index estimates all NASDAQ domestic or international based shares common on the Nasdaq Stock Market.
The fund invests at least 80% of total assets in stocks found in the Index.
Additionally, it applies a statistical sampling method that encompasses other aspects such as industry exposure, capitalisation, P/E ratio, PB ratio, earnings growth, and dividend yield to form a mix of securities listed in the base index as long as they mimic the investment profile of the Index.
In terms of exposure to different sectors, the COMP is more tech-inclined with some allocations in the healthcare sector.
8. First Trust Nasdaq Cyber Security ETF (CIBR)
This ETF follows the Nasdaq CTA Cyber Security Index, one of the oldest funds and most prominent in the current world of digitisation.
Because of increasing cybercrimes and cyber-attacks, the index relevance is gaining prominence and bearing.
Notably, cyber-attacks have been on the rise in tech industries, the pipeline sector, meatpacking plants, and grocery stores.
The cybersecurity market is also expected to grow globally due to threats caused by cyber-attacks and cybercrime, which affect the public and private sectors in equal measure.
Besides these catalysts, the fund aspects get support from other technologies such as cloud computing, internet-of-things, digital connectivity, and 5G mobile networks.
For this reason, investors can take advantage by staking in stocks withholding in a broad spectrum of cybersecurity shares via ETFs.
Without a doubt, such stocks can offer a lot in terms of diversification, thereby reducing inherent risks.
However, broadly, the cybersecurity market has underperformed in the last year with a 27.6% return.
This is slightly lower than the S&P total return, which stood at 28.0% as of December 2021.
By the same token, the CIBR has been the best performing ETF in the cybersecurity market category.
Some of the top holdings under CIBR include Class A Shares of Accenture PLC or ACN, a technology company.
In addition, the shares include holdings in Cisco Systems Inc or CSCO, a key player in the security, networking, cloud, and collaboration sectors.
Last but not least, another holding is Palo Alto Network Inc. (PANW), a network security company.
9. Invesco QQQ ETF (QQQ)
Invesco QQQ ETF tracks the performance of the Nasdaq 100 Index by passively following the tech-heavy corporations in the underlying index.
Typically, with passive management, the fees are low so that as an investor you can get the maximum gains of the index once it rises.
However, it should be noted that investors too usually bear any losses if and when they occur.
The main takeaway of the QQQ is that its basket encompasses big tech giants such as Apple, Meta, Amazon, and Google.
In addition, investors can leap big when the market is bullish, which exposes them to sustained growth, lower fees, and available liquidity.
However, in a bearish market, the fund declines faster, as you are exposed to higher risks.
Also to note, the ETF is one of the most popular globally, with up to 100 holdings.
The holdings are strongly inclined towards large-cap tech companies, bringing the total assets under its management to a whopping $212.25 billion.
Previously known as the PowerShares QQQ Trust Fund, this ETF is referred to as the cubes or triple Qs in other circles. It’s also mostly viewed as a mirror of the performance of the tech sector trading.
As opposed to the underlying index, the QQQ is a highly marketable security that is rebalanced every 3 months and recomposed yearly.
It’s important to keep in mind that the technology sector is projected to shape the global economy in the coming years, making the QQQ a favourable ETF with long-term growth potential.
Best Dow Jones ETFs
10. SPDR Dow Jones Industrial Average ETF Trust (DIA)
This ETF tracks large companies in the United States which must be selected by Wall Street Journal editors.
Whereas no rules exist for the inclusion of these companies in the Index, they must contribute immensely to the economic growth.
Additionally, the DJIA (Dow Jones Industrial Average) comprises 30 large companies, lower than the 500 contained in the S&P 500 Index.
Established in 1896, the DJIA is one of the oldest, and the SPDR is the largest fund that tracks it.
The expense ratio of this fund currently stands at 0.16 and, therefore, is an excellent choice for investors looking for a low-cost ETF.
Lastly, the fund has invested in a broad basket of holdings, including blue-chip companies such as Home Depot Inc., UnitedHealth Group Inc., and Microsoft Corporation.
11. iShares Dow Jones Industrial Average UCITS ETF (CIND)
The ETF tracks a Dow Jones Industrial Average Index performance comprising the top 30 largest US companies in various sectors except for utilities or transportation.
It’s a great choice for investors looking to stake their funds in broad category industries. In addition, it allows you to stake in listed industrial firms in the US.
However, this fund’s main risk is that it is prone to impact by global factors such as political, corporate events, and company earnings.
The fund has been consistently growing since 2010 except in 2020, when it was affected by the COVID-19 pandemic.
Fortunately, the performance picked up steadily from 2021.
Best for Dividends
12. Invesco KBW High Dividend Yield Financial ETF (KBWD)
The fund is based on the performance of the KBW NASDAQ Financial Sector Dividend Yield Index, which is the underlying Index.
Additionally, it seeks to invest at least 90% of its assets in securities of listed financial firms that offer high dividend returns in the US and which are part of the Index.
It’s also investor-friendly and gives you an option to stake in top holdings, including Newtek Business Services Corp., FS KKR Capital Corp ORD, and Ready Capital Corp.
If you are looking to invest your funds in a wide range of financial products, you can opt for the KBWD ETF, a passively-managed exchange-traded fund.
It was established on 12th February 2010 and is popular due to lower costs, flexibility, and transparency.
With over $232 million assets, the fund is one of the largest mid-sized ETFs that mimic the performance of the equity market’s Financial and Broad divisions.
13. WBI Power Factor High Dividend ETF (WBIY)
The ETF seeks to offer investment results that replicate the price and yield of the Solactive Power Factor High Dividend Index (the base index).
The fund invests at least 80% of the assets in securities of the base index so that it exhibits specific value characteristics.
Worth noting, the parent index comprises large, mid, and small-cap securities in the U.S.
These include at least 3,000 large corporations picked depending on free-float market capitalisation.
Launched on 19th December 2016, WBIY’s total asset value is 65.72 million, with a lower net expense ratio of 0.70%.
The total holdings include allocations in financial services, consumer cyclical, consumer defensive, energy, and health care.
On the same note, some of the top holdings include tech giant International Business Machines Corp.(IBM), Philip Morris International Inc, and Dow Inc.
Last but not least, the fund primarily invests in high-yielding shares, which can be speculative and high risk.
Other Notable US ETFs
14. Vanguard Total International Stock ETF (VXUS)
This fund tracks the performance of the FTSE Global All Cap ex U.S. Index which estimates the investment return of stocks from small, mid, and large-cap equities of companies outside the U.S.
The fund is an excellent choice for investors looking for exposure to a broad market across borders and non-U.S equity markets, thereby providing diversity.
In addition, the fund follows a passively managed index and replication approach that ensures the expense ratio is below the industry average for comparable funds.
The fund was established in 2011 and has earned investors an annualised rate of return of 4.99%.
The advantage of stock movements for foreign companies is that they have no direct connection with local stock prices.
Therefore, investors have exposure to stock movements that are different from U.S. equity markets shifts.
Moreover, the fund invests at least 95% of the holdings in replicating the performance of the base index.
Regarding geographic allocation, the fund’s spread includes Europe 37.6%, Pacific 28.8%, 26.4% emerging markets and North America 6.2%.
Some of the top holdings include Samsung Electronics, Nestle, Tencent Holdings and Alibaba Group.
ETFs are becoming increasingly popular among investors because they provide diversification and flexibility.
If you are investing in stocks, but your portfolio lacks diversity, then ETFs could be a great investment option.
By providing diversification and exposure through its index fund, you can rest assured that you are investing in a broad range of stocks.
However, if you need help investing, you can get help from a financial advisor.