ETF investing isn’t necessarily the most fun way to allocate capital, but playing stock jockey isn’t always a wise bet. Instead, using the top ETFs for 2024 as a portfolio anchor—whether retirement or taxable brokerage—helps offset and diversify the risk associated with individual stock picking.
But that doesn’t mean you should throw all your cash into a single total-market index, though (depending on your circumstances) that course of action isn’t always a bad idea. Instead, you can practice your stock-picking prowess to pin down the best ETFs to buy based on economic, sector, and similar factors.
These three top ETFs for 2024 offer a blend of upside. Though it’s a fairly aggressive mix, current indicators point to this three-ETF mix outperforming in 2024.
SPDR Portfolio S&P 600 Small Cap ETF (SPSM)
Expense ratio: 0.03%, or $3 annually on a $10,000 investment
The Nasdaq-100’s current price-to-earnings ratio is 29.15, compared to “just” 23.47 last year. By comparison, the small-cap stocks within the SPDR Portfolio S&P 600 Small Cap ETF (NYSEARCA:SPSM) have an average P/E of around 12. You’d be right if you think there’s misaligned valuation at play.
If market conditions continue, we can likely expect investors to start shying away from the mega-cap tech stocks like the Magnificent 7. Investors often see them as Icarus—flying too high, too quickly. By comparison, beat-down small-cap stocks are set to bounce back with a vengeance. Of course, picking individual small-cap stocks isn’t easy within the crowded field. But SPSM’s ETF portfolio of the top small-cap stocks blends growth and value alongside viability to capture small-cap’s “best in class” opportunities.
iShares Global Healthcare ETF (IXJ)
Expense ratio: 0.42%, or $42 annually on a $10,000 investment
If you want an ETF for the long haul, picking a healthcare ETF like the iShares Global Healthcare ETF (NYSEARCA:IXJ) is one of the safest bets. Analysts point to healthcare as one of 2024’s top investment themes, and IXJ holds a perfect blend of mature stalwarts alongside upstart biotech stocks. This blend makes IXJ an ideal way to capture volatile upside from moonshot HealthTech stocks alongside stability from those bigger players.
With artificial intelligence, automation, and more healthcare innovations, picking individual stocks best positioned to compete long-term is a tough pill to swallow. That holds doubly true if you aren’t experienced within the field and can’t necessarily discern a Theranos from an Intuitive Surgical (NASDAQ:ISRG). That’s why ETF investing tends to be best for niche sectors like healthcare (for most retail traders), and IXJ is one of the best bets within the stack.
iShares 0-5 Year High Yield Corporate Bond ETF (SHYG)
Expense ratio: 0.30%, or $30 annually on a $10,000 investment
Rates are still high, and bond yields remain solid. At the same time, wide market enthusiasm makes riskier bets like junk bonds more appealing prospects. To that end, rounding out an ETF portfolio with the iShares 0-5 Year High Yield Corporate Bond ETF (NYSEARCA:SHYG) is a great way to capture capital gains when rate cuts occur but collect income in the meantime.
The ETF’s current 30-day yield is an impressive 7.49%, and the ETF returned nearly 10% over the past year when accounting for distributions. Better yet, the ETF’s beta is a lowly 0.29—offering some stability even if wider market turbulence creates day-to-day peaks and valleys.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
