5 Best ETFs to Buy Right Now

Finding the best ETFs to buy right now involves taking a big-picture approach to the market. After all, the best ETF investing strategy doesn’t simply involve swing trades based on fads, but a long-term view of the market that pays off in months and years — not days and weeks.

ETFsIn other words, if you want to speculate… buy stocks, not ETFs.

The best ETFs are diversified investments that offer smart investors a way to be slightly overweight in specific sectors or geographic regions to seize outperformance.

To help you beat the market, here are five of the best ETFs out there right now that will build a complete investment portfolio meant to outperform the major indices in the months and years ahead.

Best Index ETF: PowerShares QQQ ETF (QQQ)

best etfs splvYTD Performance: +12%
Strategy: Nasdaq-100 fund
Expenses: 0.2%, or $20 on $10,000 invested
Top 3 Holdings: Apple (AAPL), Microsoft (MSFT), Google (GOOG)

2014 has been the year of large-cap tech, as some of the biggest names in the Nasdaq have come roaring back after some trouble over the last few years. That has made anyone invested in the tech-heavy Nasdaq a very happy camper.

Furthermore, the Nasdaq’s modest diversification in other sectors — notably its biotech exposure — has helped the Powershares QQQ ETF (QQQ) to outperform some major dedicated technology funds like the Technology SPDR (XLK). And at a much cheaper expense ratio, to boot.

Visit the official fund website here.

Best Tech ETF: iShares Dow Jones U.S. Technology ETF (IYW)

isharesYTD Performance: +15%
Strategy: Technology sector fund
Expenses: 0.46%, or $46 on $10,000 invested
Top 3 Holdings: Apple (AAPL), Microsoft (MSFT), IBM (IBM)

Large cap tech has outperformed across the board, but the iShares Dow Jones U.S. Technology ETF (IYW) is among the best performers in these sector funds — mostly thanks to a trick of weighting. An interesting side note is that the fund also yields a modest 1.1% in dividends right now thanks to exposure to tech megacaps that are increasingly providing income to shareholders … a nice sweetener.

Visit the official fund website here.

Best Healthcare ETF: SPDR S&P Biotech ETF (XBI)

XLY consumer discretionary SPDRYTD Performance: +17%
Strategy: Healthcare sector fund
Expenses: 0.35%, or $35 on $10,000 invested
Top 3 Holdings: Puma Biotechnology (PUMA), Pharmacyclics (PCYC), Anacor (ANAC)

This spring, many investors were scared out of biotech investments as the sector broke down. However, many biotech stocks have bounced back nicely in the last few months — including the SPDR S&P Biotech ETF (XBI), which has gained 25% in the last 90 days from 2014 lows.

Part of the reason is that only a single stock right now (that’d be top holding PUMA) is worth more than 1.61% of the entire portfolio. This diversification allows the XBI fund to seize opportunities where it finds them instead of being beholden to just a few big names in biotech.

Visit the official fund website here.

Best Global ETF: iShares MSCI India ETF (INDA)

isharesYTD Performance: +25%
Strategy: India country fund
Expenses: 0.67%, or $67 on $10,000 invested
Top 3 Holdings: Infosys (INFY), HDFC Bank (HDB), Reliance Industries

Emerging markets at large have been painful, and India has been disappointing to investors over the last few years as growth has remained challenge, inflation has been a problem and political infighting has prevented progress in the world’s largest democracy.

But recent moves by the central bank and pro-business political moves have caused Wall Street to become more optimistic on the region. Given its massive population and untapped consumer potential in the long-term, it’s wise to have some exposure to this emerging market and the iShares MSCI India ETF (INDA) is a good, diversified way to play the region.

Visit the official fund website here.

Best Bond ETF: Vanguard Short-Term Bond ETF (BSV)

VanguardYTD Strategy: +0.5%
Strategy: Bond fund
Expenses: 0.1%, or $10 on $10,000 invested
Top 3 Holdings: U.S. Government Bonds

I am reluctant to recommend a bond fund at all, given the fact that interest rates are certainly due to rise in the next year or so… but still, the 10-year Treasury has lost about 60 basis points since January. Sure, it’s nice that long-term bond funds like the iShares 20+ Year Treasury Bond Fund (TLT) has outperformed the stock market year-to-date with an impressive 14% run … but that simply can’t last.

When interest rates rise, bond funds of longer duration will take a hit — so if you have to go with bonds, I’d go very short-term with Vanguard Short-Term Bond ETF (BSV) and pivot back into long-term bond funds in early 2015.

Visit the official fund website here.

Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.

Article printed from InvestorPlace Media, https://investorplace.com/2014/08/5-best-etfs-to-buy-right-now/.

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