Different ETFs target different industries and are designed to suit a variety of investment strategies, so the best ETF for you depends on your investment time frame, financial goals and appetite for risk. We’ve rounded up a list of some of the top performing ETFs this year to help you build your portfolio.
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Best ETFs of 2024
Below are the 5 highest returning equity exchange-traded funds (ETFs) based on year-to-date (YTD) performance for 2024, with expense ratios below 0.25%, $3 million average daily trading volume, and at least $50 billion assets under management (AUM).
Logo
ETF name and ticker
ETF description
Expense ratio
YTD return
Invesco QQQ Trust Series I (QQQ)
QQQ is an Invesco ETF that mirrors the NASDAQ-100 Index, providing exposure to top non-financial companies.
0.20%
32.34%
Vanguard S&P 500 ETF (VOO)
VOO is a Vanguard ETF replicating the S&P 500 Index, offering broad exposure to top U.S. stocks.
0.03%
10.65%
iShares Core S&P 500 ETF (IVV)
IVV is an iShares ETF that tracks the S&P 500 Index, offering broad exposure to leading U.S. companies.
0.03%
10.60%
SPDR S&P 500 ETF Trust (SPY)
SPY is a popular SPDR ETF mirroring the S&P 500 Index, allowing investors to access top U.S. stocks.
0.09%
10.57%
Vanguard Total Stock Market ETF (VTI)
The Vanguard Total Stock Market ETF seeks to track the performance of the entire U.S. stock market.
There are thousands of ETFs to choose from, so you’ll need to consider a wide range of factors when deciding where to invest your money. These include:
Your investment time frame. How long are you planning to invest your money? Some ETFs adopt a high-risk strategy to target high short-term growth, while others are designed for long-term growth to suit investors who plan to buy and hold for a long time.
Your investment strategy. What do you want to achieve by investing in an ETF? Will you take a conservative approach in the hope of earning steady long-term gains, or will you adopt a high-risk/high-reward strategy to target quick gains? If you prefer lower risk, you could also consider index funds.
How the fund works. Make sure you understand the nature of the product and the risks involved before you invest in an ETF. Download the fund’s prospectus and read through the details. Is it a passive ETF or is it actively managed? Which index, sector or industry is its core theme?
Check the returns. Look at the returns the ETF has provided, after fees, over different periods of time. How has it performed over a one-year period? How has it performed over several years? How does this performance compare to the competition?
Fees. Fees strongly influence your return on investment. Read the fine print to find out the management fee that applies to the ETF, and remember that you’ll also need to factor brokerage fees into your calculations when buying and selling ETFs.
Talk to a financial adviser. If you’re unclear about an investment, how it works or its returns, contact a licensed professional to help you learn more.
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ETF fees to consider
High fees can make a big dent in your overall investment returns. There are two main costs involved when investing in listed funds: brokerage and management fees.
Management fee. This is often displayed as the management expense ratio (MER), which is the percentage of your return charged as fees by the ETF’s fund manager. Normally, the more work a fund manager has to do to keep the ETF profitable, the higher the fee — though this won’t always be the case. This is why many active ETFs charge higher fees than index ETFs, which passively track an index. As a general guide, ETF management fees range from about 0.05% to 2.5%.
Brokerage fees. Like with stocks, your broker may charge a transaction fee every time you invest money into an ETF. This fee comes down to which trading platform or brokerage you use, and it could be a flat fee or calculated based on your trade value. As a general guide, expect brokerage fees to range from around $0 to $5 per transaction.
To find the trading platform that offers the lowest fees, you’ll first need to decide how much you want to invest and how many lump sums you’ll be investing over a year. If it’s just a single lump sum, finding a platform that doesn’t charge an inactivity fee will be key. If you plan on frequently buying small amounts, the brokerage fee itself will be more important.
What are the risks of investing in ETFs?
Before deciding whether ETFs are the best investment solution for you, make sure you’re fully aware of how they work and have an in-depth understanding of all the risks involved. These include:
You could lose money. The value of ETFs and other types of listed funds rise and fall like any listed stock, which means there are similar risks involved.
Single-asset ETFs. Some ETFs bundle together a diverse range of securities that protect the investor from market falls; others focus on one asset class. For example, a commodity ETF that invests in a particular metal will do well when that metal’s price goes up, but it will also fall quickly if prices don’t have the protection of other asset classes.
Tracking errors. Fees, taxes and other factors can sometimes mean that an ETF doesn’t accurately track the performance of an index.
Leveraged and inverse ETFs. Leveraged ETFs are designed to provide higher short-term returns than traditional ETFs, but they’re a high-risk option with higher fees. Inverse ETFs allow you to hedge against falling markets, but they can be confusing for novice investors and come with their own unique risks.
Currency risks and international taxes. If you invest in a global ETF, changes in the value of the US dollar will have a direct impact on the value of your investment. You may also need to pay foreign taxes, so make sure you’re aware of all tax implications of an ETF before you commit any funds.
Synthetic ETFs. These have all the same risks as physical ETFs, but they also expose you to other potential risks such as counterparty risks. There’s also the possibility that the price of futures will differ from the price of an underlying asset.
What Matt thinks about investing in ETFs
ETF investing is a no-brainer if you're a beginner investor who's unfamiliar with the markets or you just don't have the time or interest to pick and choose individual stocks. If you want to do no research, total stock market ETFs are available. If you're keen to invest in the Oil and Gas industry, consider an energy sector ETF. You've got plenty of options for low-cost ETFs to help you build the foundation of your portfolio.
Basic details about a fund can be found in its prospectus, which (in most cases) must be filed with the US Securities and Exchange Commission (SEC) before an ETF can be publicly traded. The prospectus breaks down key information about a fund including:
Fees and costs
Investment objectives
Risk level
Performance
View all public filings related to ETFs and other regulated US securities on the SEC website. You can also access an ETF’s prospectus by visiting the issuing company’s website.
Bottom line
Business cycles, demographic trends and bull or bear markets can often last for years, so ETFs with strong momentum sometimes continue to perform strongly — and vice versa.
Comparing recent performance of ETFs can help inform your investment planning and provide you with ideas for where to invest your money.
Performance is only one of several factors to consider when choosing an ETF. You should also look at fees, how risky the product is, your investment goals and how long you can afford to invest for.
From there, continue to research your investment choices and be as thorough with the trading platforms and services you consider.
Tim Falk is a freelance writer for Finder. Over the course of his 15-year writing career, he has reported on a wide range of personal finance topics. Whether you're investing in stocks and ETFs, comparing savings accounts or choosing a credit card, Tim wants to make it easier for you to understand. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
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