ETFs remove many of the complexities of stock investing. Instead of buying various stocks and monitoring dozens of picks, you can let an ETF do the work for you.
ETFs give investors instant portfolio diversification and spread their capital across a basket of securities. However, portfolio diversification does not guarantee a good performance. Some ETFs tremendously underperform and hurt investors.
Investors should look at an ETF’s holdings and see if they like the structure. Then, they can feel more confident holding onto their shares, even when the market enters a correction. ETFs have varying performances, but investors may want to consider these three funds for hassle-free performance.
VanEck Semiconductor ETF (SMH)
Investors look at a fund’s historical performance to assess if it can generate solid gains in the future. While past results do not guarantee future success, a proven ETF is favorable.
The VanEck Semiconductor ETF (NASDAQ:SMH) certainly fits the bill. Shares have gained 49% year-to-date and are up by 215% throughout the past five years. The fund gives investors exposure to companies that benefit from the growing demand for semiconductors.
Semiconductors power all of the technology we use. You can find semiconductor chips in smartphones, computers, refrigerators, TV screens, cars and other resources. The world’s reliance on semiconductors suggests the industry will continue to grow in the years ahead.
The VanEck Semiconductor ETF has a 0.35% expense ratio. The fund’s top holdings are Nvidia (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing (NYSE:TSM), and Broadcom (NASDAQ:AVGO). Those positions make up 20.71%, 12.78%, and 6.85% of the fund’s total assets, respectively.
Vanguard Growth ETF (VUG)
The Vanguard Growth ETF (NYSEARCA:VUG) has been a steady performer for several years. The fund has gained 33% year-to-date and is up by 88% throughout the past five years.
This growth ETF aims to mirror the performance of the CRSP United States Large Cap Growth Index. The fund contains many household names and is less prone to sharp selloffs.
Large-cap growth companies tend to have multiple business segments that lead to outsized gains and more market share. Many of these companies have withstood decades of economic cycles and market volatility.
VUG has a 0.04% expense ratio, making it one of the most affordable ETFs around. Investors also get to enjoy dividend payments along the way. The Vanguard Growth ETF’s top three holdings are Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN). Those positions make up 12.78%, 11.79%, and 5.93% of the fund’s assets, respectively.
VUG gives investors exposure to many verticals, but tech has an outsized impact on total returns. Tech stocks make up more than half of VUG’s total assets.
Invesco QQQ Trust Series 1 (QQQ)
The Invesco QQQ Trust Series 1 (NASDAQ:QQQ) mirrors the Nasdaq-100 and is one of the most traded securities in the world. The fund has a reasonable 0.20% expense ratio and has been around since 1999.
QQQ has 101 holdings which total over $200 billion in assets under management. The fund does not have a minimum initial investment requirement and is eligible for fractional shares trading.
The top three holdings in QQQ are Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Microsoft, and Amazon. These positions make up 10.93%, 9.67% and 5.35% of the fund’s total assets, respectively.
More than half of the fund’s assets are dispersed among tech stocks. Consumer discretionary is the second largest category and makes up almost 20% of the fund’s assets. QQQ has gained 40% year-to-date and is up by 113% throughout the past five years.
QQQ is a bet on tech. Investors who believe technology stocks and large-cap names like FAANG will perform well may benefit from this fund.
On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
