You don’t have to pick the best stocks to generate solid returns. Some investors pour their capital into ETFs that offer diversified portfolios. Fund managers monitor these portfolios, making adjustments to mirror benchmarks and potentially generating higher returns for shareholders.
ETFs have expense ratios that reduce your total returns, but most top ETFs keep these ratios low. You may end up with an ETF below 0.20%, but some funds have expense ratios closer to 1%.
Reviewing an ETF’s holdings and past performance can offer clues about how it may perform in the future. These are some of the top ETFs to buy in April, which can serve as good starting points for your research.
Vanguard Growth Index Fund ETF (VUG)
The Vanguard Growth Index Fund ETF (NYSEARCA:VUG) has more than 200 holdings with a strong concentration in the tech sector. This one sector makes up more than half of the fund’s total assets. Consumer Discretionary makes up 20% of the fund’s total portfolio, which doesn’t leave much room for other sectors.
The Magnificent Seven fill this fund’s list of Top 10 holdings. Microsoft (NASDAQ:MSFT) is the largest holding, making up 12.84% of the fund’s total assets. VUG has delivered steady returns for long-term investors. The stock has gained 38% over the past year and 115% over the past five years.
Vanguard funds are known for having low expense ratios, and VUG is no exception to the rule. The large growth fund only has a 0.04% expense ratio along with a 0.46% 30-day SEC yield. The fund prioritizes domestic growth stocks that have large market caps.
Invesco QQQ Trust Series 1 (QQQ)
The Invesco QQQ Trust Series 1 (NASDAQ:QQQ) fund uses the Nasdaq 100 as its benchmark. The fund’s top 10 holdings are also filled with Magnificent Seven stocks. The stock is up by 39% over the past year and has rallied by 141% over the past five years.
The fund has generated 320% more returns than the S&P 500 since its 1999 launch. This stretch includes the dotcom bubble when QQQ lost more than 80% of its value from peak to trough. The fund has recovered marvelously since then.
QQQ has a generous 0.20% expense ratio and has options available for people who want to use covered calls to increase their income. In addition to the Magnificent Seven, Broadcom (NASDAQ:AVGO) and Costco (NASDAQ:COST) also made the fund’s list of top 10 holdings. Tech makes up more than half of the fund’s total assets.
iShares Semiconductor ETF (SOXX)
This fund has a higher expense ratio but has also delivered better returns. The iShares Semiconductor ETF (NASDAQ:SOXX) exposes investors to the semiconductor industry. Nvidia (NASDAQ:NVDA), Broadcom and Advanced Micro Devices (NASDAQ:AMD) are its top three holdings. These stocks make up over 23% of the fund’s total assets.
SOXX has a 0.35% expense ratio, which isn’t bad for an ETF up 55% over the past year. The stock has gained an even more impressive 243% over the past five years. The fund also has an annualized return of 24.47% over the past 10 years.
The stock’s performance has been solid, but it’s semiconductors or bust. Given recent shifts in the industry, it’s also artificial intelligence or bust. The ETF has many profitable companies that have opportunities to raise revenue and profit margins. However, you will have to buy an additional fund for more diversification so your portfolio doesn’t revolve around the semiconductor industry.
On this date of publication, Marc Guberti held a long position in VUG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
