Please ensure Javascript is enabled for purposes of website accessibility

3 Top Robinhood ETFs to Buy Now

By Barbara Eisner Bayer – Updated Mar 12, 2021 at 6:36PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Aggressive investors can bring some stability to their portfolios with these great ETFs.

Are you a Robinhood investor or plan to be one? The hot mobile trading app registered 3 million new users in just the first quarter of 2020, and some of them have been making a lot of money since the market has recovered from the shellacking stocks got in March.

In August, Robinhood users were scooping up shares of Moderna, Eastman Kodak, and Nio. That's a mighty aggressive list of names that have one thing in common: high risk. Will Moderna's vaccine be successful, can Eastman Kodak win by entering an entirely new field, and will Nio resolve investors' concerns about its balance sheet?

While these companies are impressive in their own right, buying them all would create a portfolio of maximum risk, which can be a bit unsettling, even to younger investors with a long-term horizon. But Robinhood also offers a way to avoid this by diversifying your portfolio with exchange-traded funds, or ETFs.

The letters ETF on piles of coins.

Image source: Getty Images.

Robinhood offers roughly 500 ETFs to purchase. Here are three top buys that can help make you a successful investor while limiting destruction of your portfolio if one company takes a hit.

A safer way to invest in AI and robotics

According to Fortune Business Insights, "The global artificial intelligence (AI) market size was valued at USD 27.23 billion in 2019 and is projected to reach USD 266.92 billion by 2027," which translates to a compound annual growth rate of 33.2%. Currently, robots are performing surgeries and cleaning our floors, and they'll be able to perform many more tasks as the technology develops.

But how does an investor decide which company is going to be the leader and which may fall by the wayside? With the Global X Robotics & Artificial ETF (BOTZ 3.37%), you don't need the answer.

BOTZ invests in companies that "potentially stand to benefit from increased adoption and utilization of robotics and artificial intelligence (AI), including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles."

It currently has 31 holdings, including NVIDIA Corp, Intuitive Surgical, and Brooks Automation, that span more than seven countries. BOTZ invests at least 80% in companies in the Indxx Global Robotics & Artificial Intelligence Thematic Index.

If you want a high-growth opportunity in a high-risk business with some safety added, this is a perfect ETF to augment your stock portfolio.

Coins in bowl being scooped out by spoon with various currency underneath

Image source: Getty Images.

Little bites of lots of stocks

There are so many stocks available for purchase -- wouldn't it be nice to buy a little piece of them all? You can by purchasing an S&P 500 index fund. This can help soften the blow of a hit-or-miss strategy that you use when picking individual companies and will give your holdings a foundation while you're out there looking for the next Tesla.

Robinhood offers you the opportunity to invest in the the SPDR S&P Index Fund (SPY 3.12%), which "tracks a market-cap-weighted index of U.S. large- and midcap stocks selected by the S&P Committee." And it even pays a dividend, with a dividend yield of 1.63%.

By adding an S&P index fund to your holdings, you'll have a portfolio foundation with a long-term average return of 10%. As a result, you'll be achieving a nice growth rate while you're out there shooting for the moon with individual stocks.

Calculator, model house, and book reading REIT on desk

Image source: Getty Images.

Add some real estate -- with a dividend

Finally, you have an opportunity to diversify your portfolio and add passive income with a dividend by investing in a real estate investment trust (REIT). A REIT gives investors the chance to invest in broad-based real estate without having to purchase it directly. Robinhood offers the Vanguard US REIT Fund (VNQ 2.18%), which "tracks a market-cap-weighted index of companies involved in the ownership and operation of real estate in the United States."

This diversified fund holds REITs in healthcare, hotel and resorts, industrial properties, and residential, and has a dividend yield of 3.76%. Some of its top holdings include American Tower Corp., Public Storage, and Welltower.

The fund is a nice complement to a portfolio of mostly Robinhood growth stocks, as it won't necessarily move in tandem with individual securities.

It's sure nice to make a killing when a gem like Tesla rises seemingly to the moon, but you can't always find a diamond in the rough. Take advantage of what Robinhood has to offer by adding the above ETFs to your portfolio, and you'll minimize your risk through portfolio diversification. You can then have some financial stability as you set off to find the next million-dollar baby.

Barbara Eisner Bayer has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends American Tower, Intuitive Surgical, NVIDIA, and Vanguard REIT ETF and recommends the following options: long January 2022 $580 calls on Intuitive Surgical and short January 2022 $600 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

SPDR S&P 500 ETF Trust Stock Quote
SPDR S&P 500 ETF Trust
SPY
$368.32 (3.12%) $11.14
Vanguard Specialized Funds - Vanguard Real Estate ETF Stock Quote
Vanguard Specialized Funds - Vanguard Real Estate ETF
VNQ
$81.92 (2.18%) $1.75
Global X Funds - Global X Robotics & Artificial Intelligence ETF Stock Quote
Global X Funds - Global X Robotics & Artificial Intelligence ETF
BOTZ
$18.69 (3.37%) $0.61
NVIDIA Corporation Stock Quote
NVIDIA Corporation
NVDA
$126.69 (4.37%) $5.30
Intuitive Surgical, Inc. Stock Quote
Intuitive Surgical, Inc.
ISRG
$194.74 (3.90%) $7.30
Eastman Kodak Stock Quote
Eastman Kodak
KODK
$4.71 (2.50%) $0.12
Welltower Inc. Stock Quote
Welltower Inc.
WELL
$65.76 (2.24%) $1.44
Public Storage Stock Quote
Public Storage
PSA
$295.01 (0.75%) $2.20
American Tower Corporation Stock Quote
American Tower Corporation
AMT
$218.00 (1.53%) $3.29
Azenta Stock Quote
Azenta
AZTA
$45.01 (5.02%) $2.15
Nio Inc. Stock Quote
Nio Inc.
NIO
$15.62 (-0.92%) $0.14
Moderna, Inc. Stock Quote
Moderna, Inc.
MRNA
$121.86 (3.05%) $3.61

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.