In 2024, investors will be seeking the best ETFs (exchange-traded funds) to bolster their portfolios with top-performing stocks, steady income streams, and growth opportunities (https://gomyfinance.com/about-us-gomyfinance/). Whether you’re aiming for long-term capital appreciation or consistent dividends, selecting the right ETF can help maximize your returns while diversifying your investments. So, What’s the best ETF to invest in 2024?
The best ETF to invest in 2024 will depend on your financial goals, risk tolerance, and investing horizon. Some top contenders include growth ETFs tracking major indices like the S&P 500, as well as dividend and income funds offering exposure to high-yielding stocks. This article explores the leading ETF options to consider for your portfolio, evaluating factors like historical performance, expense ratios, and potential for future growth.
iShares International Select Dividend ETF (IDV)
The iShares International Select Dividend ETF (IDV) seeks to track the investment results of an index composed of relatively high dividend-paying equities in non-U.S. developed markets. As of May 8, 2024, the fund had net assets of $4,198,819,476 and 146,300,000 shares outstanding.
Key Metrics
| Metric | Value |
|---|---|
| NAV (May 8, 2024) | $28.70 |
| 1-Day NAV Change | -0.03 (-0.09%) |
| YTD Total Return (May 7, 2024) | 3.25% |
| Expense Ratio | 0.51% |
| Yield (TTM) | 6.6% |
| 5-Year Annualized Return | 4.3% |
- The fund’s top holdings as of May 7, 2024 included British American Tobacco, TotalEnergies, BHP Group, Mercedes-Benz Group, and Rio Tinto.
- The fund’s sector allocations were led by Financials (30.76%), Utilities (16.47%), and Communication (11.09%).
- The fund’s sustainability characteristics included an MSCI ESG Fund Rating of AA, an MSCI ESG Quality Score of 7.3, and an MSCI Weighted Average Carbon Intensity of 197.10 tons CO2E/$M SALES.
- The fund’s business involvement metrics showed exposure to Thermal Coal (3.38%) and Tobacco (6.41%).
Performance Comparison
| Time Period | Fund Return | Category Return |
|---|---|---|
| YTD | 3.30% | 2.39% |
| 1-Year | 9.03% | 9.30% |
| 3-Year | 0.95% | 3.64% |
The fund invests at least 80% of its assets in the component securities of the underlying index, which measures the performance of 100 high dividend-paying companies in the EPAC (Europe, the Pacific, Asia and Canada) region. The fund has $4.07 billion in net assets and a yield of 6.63%.
Schwab U.S. Dividend Equity ETF (SCHD)
The Schwab U.S. Dividend Equity ETF (SCHD) is a popular dividend-focused ETF that has garnered attention from investors seeking steady income streams. Here are some key points about this ETF:
Performance and Metrics
The SCHD ETF price gained 0.332% on the last trading day (May 8, 2024), closing at $78.51. The ETF is moving within a horizontal trend, and further movements within this trend can be expected. There is a 90% probability it will trade between $75.90 and $80.74 by the end of the 3-month period.
| Metric | Value |
|---|---|
| Yield (TTM) | 3.3% |
| 5-year Annualized Return | 11.6% |
| Expense Ratio | 0.06% |
The ETF holds buy signals from both short and long-term moving averages, but has a general sell signal as the long-term average is above the short-term. Additionally, the ETF had a “Golden Star Signal” on July 10, 2023, which is a rare and bullish technical signal.
Dividend and Holdings
The ETF’s dividend payout history is included, with the most recent dividend of $0.611 paid on March 25, 2024, yielding 0.770%. The ETF’s portfolio consists of 102 blue-chip dividend stocks, with the top 10 holdings making up 40.5% of the fund’s assets.
Analyst Ratings and Recommendations
- The recommended stop-loss for the ETF is $74.82, which is 4.70% below the current price.
- The predicted opening price for May 9, 2024 is $78.35, which is 0.20% lower than the previous close.
- The ETF’s Fibonacci support and resistance levels are provided, with the current price of $78.51 falling between the S1 support at $78.13 and the R1 resistance at $78.58.
- The analysis concludes that the ETF should be considered a “Hold/Accumulate” candidate at the current level, as the positive signals are not enough for a full “Buy” recommendation.
- Wall Street analysts have a Moderate Buy consensus rating on the SCHD ETF, with an average price target of $78.80, implying 3.4% upside potential.
Despite a relatively underwhelming performance in 2023, returning 4.6% compared to the S&P 500’s 23.6% return, the SCHD ETF has a strong long-term track record, generating annualized returns of 10.7% over the past 5 years, 10.5% over the past 10 years, and 12.6% since its inception in 2011.
SPDR S&P Dividend ETF (SDY)
Overview
The SPDR S&P Dividend ETF (SDY) is an exchange-traded fund that tracks the S&P High Yield Dividend Aristocrats Index, investing in companies that have consistently increased their dividends for at least 20 consecutive years. The ETF is traded on the NYSE Arca exchange.
Key Metrics
| Metric | Value |
|---|---|
| Current Price (May 8, 2024) | $129.90 |
| 52-Week High | $146.28 |
| 52-Week Low | $136.31 |
| Market Capitalization | $20.233 billion |
| Dividend Yield (TTM) | 3.47% |
| 5-Year Annualized Return | 7.9% |
| Expense Ratio | 0.35% |
- The SDY ETF closed at $129.90 on May 8, 2024, up 0.0154% for the day, and has gained for 6 consecutive days, rising 1.13% over the past 2 weeks.
- Technical analysis indicates the ETF is in a short-term rising trend and is expected to rise 3.03% over the next 3 months, with a 90% probability of trading between $129.43 and $137.07.
- The ETF had a “Golden Star Signal” on May 2, 2024, which is a rare technical signal that often precedes long and strong gains.
Dividend History
The SDY ETF pays dividends quarterly, with the most recent dividend of $0.708 paid on March 20, 2024. Here are the recent quarterly dividend payouts:
- $0.708 (March 20, 2024)
- $1.96 (December 18, 2023)
- $0.793 (September 18, 2023)
- $0.81 (June 19, 2023)
- $0.713 (March 20, 2023)
Support and Resistance
The ETF has support at $128.52 and resistance at $130.64, with the predicted opening price for May 9, 2024, being $129.77.
Vanguard High Dividend Yield ETF (VYM)
The Vanguard High Dividend Yield ETF (VYM) is a popular exchange-traded fund that tracks the FTSE High Dividend Yield Index, providing investors with exposure to companies that consistently pay high dividends. Here are some key details about this ETF:
- Yield and Returns
- Low Expense Ratio The VYM ETF has an expense ratio of 0.06%, which is significantly lower than the category average, making it a cost-effective investment option.
- Sector Allocation The fund’s sector allocation is well-diversified, with the top sectors being:
- Financials (21.6%)
- Energy (14.8%)
- Healthcare (12.9%)
- Top Holdings Some of the top holdings in the VYM ETF as of May 2024 include:CompanySectorWeightingExxon Mobil Corp.Energy3.8%JPMorgan Chase & Co.Financials3.6%Johnson & JohnsonHealthcare3.2%
- Performance Comparison Over the past year, the VYM ETF has outperformed both the S&P 500 Index and the category average for dividend-focused ETFs, delivering a total return of 8.2% compared to 6.9% for the S&P 500 and 7.1% for the category average.
The Vanguard High Dividend Yield ETF (VYM) is a solid choice for investors seeking a low-cost, diversified portfolio of high-yielding stocks with a proven track record of consistent dividend payments.
WisdomTree U.S. Quality Dividend Growth Fund (DGRW)
The WisdomTree U.S. Quality Dividend Growth Fund (DGRW) seeks to track the investment results of dividend-paying large-cap companies with growth characteristics in the U.S. equity market.
Key Fund Details
| Metric | Value |
|---|---|
| Expense Ratio | 0.28% |
| Total Assets | $12.69 billion |
| Inception Date | May 22, 2013 |
| Distribution Yield | 1.04% |
| SEC 30-day Yield | 1.58% |
Performance
- 1-year return: 17.16% (NAV), 17.10% (Market Price)
- 3-year return: 9.81% (NAV), 9.81% (Market Price)
- 5-year return: 12.83% (NAV), 12.81% (Market Price)
- 10-year return: 12.29% (NAV), 12.29% (Market Price)
- Since inception (May 22, 2013) return: 12.66% (NAV), 12.65% (Market Price)
The top 10 holdings make up 36.81% of the portfolio, with the top holdings being Microsoft (7.81%), Apple (4.76%), and Broadcom (3.68%). The sector breakdown shows the largest allocations are to Information Technology (29.0%), Health Care (16.65%), and Industrials (12.80%).
The fund invests at least 80% of its total assets in component securities of the index and investments that have economic characteristics substantially identical to the index. The index is a fundamentally weighted index that consists of dividend-paying U.S. common stocks with growth characteristics.
Recent Metrics (May 8, 2024)
- Net Assets: $12.3 billion
- NAV: $74.84
- Yield: 1.71%
- YTD Daily Total Return: 6.94%
- Beta (5Y Monthly): 0.84
- Expense Ratio (net): 0.28%
The top 10 holdings (36.59% of total assets) include Microsoft, Apple, Broadcom, AbbVie, and Johnson & Johnson. The sector weightings are Technology (28.69%), Healthcare (16.80%), Industrials (12.62%), Financial Services (11.92%), and Consumer Defensive (11.56%).
DGRW is designed to track the WisdomTree U.S. Quality Dividend Growth Index, which includes dividend-paying firms with strong earnings growth expectations and high return-on-equity and return-on-assets metrics. Dividend equities have historically shown resilience during market downturns and offer the potential for quicker recovery after losing less than other non-dividend benchmarks.
In April 2024, DGRW outperformed the broader U.S. value equity indexes, though it lagged some other dividend-focused strategies like the WisdomTree U.S. High Dividend Fund (DHS) which has a higher dividend yield focus. DGRW has a lower exposure to defensive sectors like Utilities compared to higher dividend yield strategies, and a higher exposure to growth sectors like Information Technology. The performance of DGRW in 2024 so far has been mixed, with strong performance in the first quarter followed by some underperformance in the market correction in April.
The WisdomTree U.S. Quality Dividend Growth Fund (DGRW) focuses on large-cap U.S. stocks with a history of dividend growth, has a yield of 1.6% (TTM), a 5-year annualized return of 13.2%, and an expense ratio of 0.28%.
Vanguard Russell 2000 ETF
The Vanguard Russell 2000 ETF (VTWO) seeks to track the performance of the Russell 2000 Index, which measures the investment return of small-capitalization stocks in the United States. With an expense ratio of 0.10%, VTWO is a low-cost option for investors seeking exposure to the small-cap segment of the U.S. equity market.
Key Characteristics
- Sector Allocation:
- The fund is heavily weighted in the Technology (17.24%), Industrials (15.74%), Healthcare (15.32%), and Financial Services (14.16%) sectors.
- 98.3% of the fund’s holdings are in the United States.
- Performance and Rankings:
- VTWO is ranked #15 in the Small Blend category of ETFs by U.S. News.
- The fund receives an “Excellent” rating for Costs, Tracking Error, and Holdings Diversity, and a “Typical” rating for Bid/Ask Ratio.
Small-Cap Investing Outlook
The Vanguard Russell 2000 ETF (VTWO) tracks the Russell 2000 Index, which consists of about 2,000 of the smallest publicly traded companies in the U.S.. In contrast, the Vanguard Total Stock Market ETF (VTI) effectively covers the entire universe of publicly traded stocks in the U.S., consisting of small, medium, and large companies across all sectors.
Index funds are popular with investors because they offer attractive returns, diversification, lower risk, and low costs compared to actively managed funds. Index funds typically have lower fees than actively managed funds, with stock index mutual funds averaging 0.05% and stock index ETFs averaging 0.16% expense ratios.
Tom Lee, head of research at Fundstrat Global Advisors, believes the small-cap Russell 2000 index could soar 50% in 2024. Many fund managers expect small-cap stocks to outperform large-cap stocks over the next 12 months due to cheaper valuations and anticipated interest rate cuts.
While the Russell 2000 has underperformed the S&P 500 in recent years, returning 1,060% over the last 30 years compared to 1,880% for the S&P 500, small-cap companies are more sensitive to interest rate changes, so they should benefit the most when the Federal Reserve starts cutting rates. The article recommends investors consider a small position (e.g. 5%) in the Vanguard Russell 2000 ETF, as it may take a few years for the expected outperformance to materialize.
Fund Performance and Risk
VTWO is a passively managed exchange-traded fund (ETF) that provides broad exposure to the Small Cap Blend segment of the U.S. equity market. The fund has an annual expense ratio of 0.10%, making it one of the least expensive products in the small-cap blend space.
| Key Metric | Value |
|---|---|
| Top Sector Allocations | Industrials (17%), Financials, and Healthcare |
| YTD 2024 Return | -4.90% (as of 01/17/2024) |
| 1-Year Return | 3.76% (as of 01/17/2024) |
| Beta (3-Year) | 1.16 |
| Standard Deviation (3-Year) | 23.28% |
| Zacks ETF Rank | 2 (Buy) |
The fund’s top sector allocations are Industrials, Financials, and Healthcare. While it has lost about -4.90% so far in 2024, it was up about 3.76% in the last one year (as of 01/17/2024). With a beta of 1.16 and standard deviation of 23.28% for the trailing three-year period, the fund is considered a medium risk choice. However, the fund holds a Zacks ETF Rank of 2 (Buy), indicating it is a great option for investors seeking exposure to the small-cap blend segment.
Vanguard S&P 500 ETF (VOO
The Vanguard S&P 500 ETF (VOO) tracks the S&P 500 Index, which represents 500 of the largest U.S. companies. The fund has an expense ratio of 0.03%, significantly lower than the average of 0.79% for similar funds. As of 05/08/2024, the fund’s market price is $475.51, with a 0.01% premium over the NAV of $475.46.
The fund’s YTD returns are 9.18% (market price) and 9.24% (NAV) as of 05/08/2024. The fund’s average annual returns since inception (09/07/2010) are 14.00% (market price) and 14.00% (NAV). The fund is managed by the Vanguard Equity Index Group.
Key Metrics
| Metric | Value |
|---|---|
| Assets Under Management | $389.2 billion |
| Average 5-year Total Return | 14.30% |
| Expense Ratio | 0.03% |
| Number of Holdings | 505 stocks |
| Top 10 Holdings | 39.62% of portfolio |
The fund holds 505 stocks, with the top 10 holdings comprising 39.62% of the portfolio. The fund’s sector weightings closely match the S&P 500 Index.
- The fund’s characteristics, such as median market cap, earnings growth rate, P/E ratio, and return on equity, are provided.
- The fund’s dividend distribution history, including payment dates and amounts, is shown.
- The Vanguard Equity Index Group manages the fund, with details on the experience and responsibilities of the portfolio managers.
The Vanguard S&P 500 ETF (VOO) has delivered strong performance with very low fees, making it a highly attractive option for investors seeking broad exposure to the U.S. large-cap equity market.
Invesco QQQ Trust (QQQ)
Overview
The Invesco QQQ Trust (QQQ) is an exchange-traded fund (ETF) that tracks the Nasdaq-100 Index, which includes 100 of the largest non-financial companies listed on the Nasdaq Stock Exchange. The QQQ provides instant diversification, growth potential, exposure to innovation and disruption, and offers liquidity and transparency.
Performance
- In Q1 2024, the Invesco QQQ (QQQ) advanced by 8.66% on an NAV total return basis but underperformed the S&P 500 Index, which returned 10.55%.
- QQQ’s overweight allocations and underperformance within the Consumer Discretionary and Telecommunications sectors were the biggest detractors from relative performance versus the S&P 500 Index.
- The Nasdaq-100 Index (NDX) is up 6.7% year-to-date, indicating the tech sector remains in strong form.
Top Performers and Detractors
| Best Performers in Q1 2024 | Return |
|---|---|
| NVIDIA | +82.46% |
| Constellation Energy | +58.45% |
| Doordash | +39.27% |
| Worst Performers in Q1 2024 | Return |
|---|---|
| Tesla | -29.25% |
| Sirius XM Holdings | -28.69% |
| Charter Communications | -25.23% |
Tesla was the worst performing stock in QQQ and the largest detractor from relative performance, falling nearly 30% for the quarter. The Telecommunications sector in QQQ was dragged lower by Charter Communications, down over 25% for the quarter. The Technology sector was a positive contributor to relative performance, with NVIDIA being the best performing stock in QQQ, returning 82.46%.
Index Changes
Splunk was deleted from the Nasdaq 100 Index (and QQQ) after Cisco acquired the company, and Linde PLC, an industrial gas and engineering company, was added to the Nasdaq 100 Index (and QQQ).
Outlook and Considerations
- The market’s focus on Fed policy is likely to continue, with investors closely watching for any signs of a reacceleration in inflation that could lead to delayed rate cuts or even future hikes.
- Many large tech companies have current earnings growth and strong cash positions, not just long-term growth potential.
- The communication services sector, which makes up ~16% of QQQ/QQQM, should benefit from rising internet advertising and subscription revenue, especially in a presidential election year.
- The healthcare sector, which makes up ~6.4% of QQQ/QQQM, could provide a small buffer if economic growth slows.
- Potential challenges for the QQQ include valuation concerns, rising interest rates, regulation and antitrust scrutiny, and geopolitical tensions.
- Diversification strategies for investors include considering sector ETFs, value stocks, commodities, and dividend-paying stocks to hedge against potential declines in growth stocks like those within the QQQ.
QQQ’s Legacy
QQQ celebrated its 25th anniversary in March 2024 and has $255 billion in assets under management. QQQ has outperformed the S&P 500 since its launch 25 years ago. 23 of the companies QQQ held at its launch in 1999 are still in the fund, including Apple, Microsoft, and Amazon. Nvidia was added to QQQ’s holdings in 2001 and has seen its market value swell from $6 billion when added to QQQ to over $2 trillion today.
Conclusion
In the ever-evolving investment landscape, selecting the right ETFs is crucial for achieving your financial goals. Whether you’re seeking growth opportunities, steady income streams, or a balanced approach, the ETFs discussed in this article offer a diverse range of options to consider for your 2024 portfolio. From dividend-focused funds to sector-specific strategies and broad market indices, these ETFs provide exposure to various market segments, allowing you to tailor your investments according to your risk tolerance and investment horizon.
As you navigate the markets, it’s essential to conduct thorough research, assess your investment objectives, and regularly review your portfolio’s performance. By staying informed and making informed decisions, you can capitalize on the potential of these ETFs and position yourself for long-term success. Remember, investing is a dynamic process, and adapting to market conditions and adjusting your strategies accordingly can be the key to achieving your financial aspirations.
