Are you kicking yourself, thinking that you missed out on the recent bull market recovery? Well, stop that.
Yes, the stock market, as measured by the S&P 500 index (which features about 500 companies that together represent around 80% of the overall U.S. market), dropped 19% in 2023 -- and was recently up a solid 9% year to date. But that doesn't mean the recovery is over.
Remember that the market is fully capable of rising significantly for several years in a row -- or doing the opposite. In 2019, 2020, and 2021, for example, the S&P 500 advanced by 29%, 16%, and 27%, respectively. You might have assumed that you'd missed the boat at the end of 2019, but you'd have been wrong.
It's folly to try to guess what the market will do next. Instead, just invest for the long term -- with dollars that can stay invested for many years. Here are five exchange-traded funds (ETFs) to consider for long-term investment. Each has a solid track record and low fees.
|
Fund |
Expense Ratio |
5-Year Avg. Annual Return |
10-Year Avg. Annual Return |
|---|---|---|---|
|
Schwab US Large-Cap Growth (SCHG) |
0.04% |
19.2% |
16% |
|
iShares Semiconductor ETF (SOXX) |
0.35% |
30.4% |
24.2% |
|
Vanguard Growth ETF (VUG) |
0.04% |
17.7% |
14.9% |
|
Invesco S&P 500 Equal Weight ETF (RSP) |
0.20% |
11.7% |
10.5% |
|
Vanguard Dividend Appreciation ETF (VIG) |
0.06% |
12.5% |
11.4% |
Data source: Morningstar.com.
1. Schwab US Large-Cap Growth ETF
The Schwab US Large-Cap Growth ETF (SCHG 0.05%) is an index fund that aims to deliver roughly the same returns (less its ultra-low fees) as the Dow Jones US Large-Cap Growth Total Stock Market Index. It's focused on large, relatively fast-growing companies, and its top holdings (of about 245 holdings) recently were Microsoft, Apple, and Nvidia. The ETF's expense ratio (annual fee) of 0.04% means you'll pay only $4 per year on a $10,000 investment. That's a low fee!
2. iShares Semiconductor ETF
The iShares Semiconductor ETF (SOXX 0.68%), which tracks the NYSE Semiconductor Index, is well worth considering because it's focused on semiconductors, which are in so many of the things we own and use every day -- including even refrigerators and washing machines.
Owning shares of this ETF will give you instant exposure to about 30 semiconductor specialists -- such as Nvidia, Broadcom, Advanced Micro Devices, and Qualcomm. This ETF's past results have been excellent and may continue to be as strong, but that's not guaranteed -- and its returns can vary widely from year to year, even more than these other ETFs.
3. Vanguard Growth ETF
The Vanguard Growth ETF (VUG 0.11%) aims to deliver returns close to the CRSP U.S. Large Cap Growth Index, less some low fees. It's focused primarily on companies growing at a faster-than-average clip, and the top few companies among its 200 or so holdings recently were Microsoft, Apple, and Nvidia, along with Amazon and the rest of the "Magnificent Seven" stocks.
Image source: Getty Images.
4. Invesco S&P 500 Equal Weight ETF
The Invesco S&P 500 Equal Weight ETF (RSP 0.60%) differs from typical index funds by being equal-weighted instead of market-cap-weighted. That means each of its 500-some holdings will influence the fund's returns as much as the others, while in market-cap-weighted indexes, companies with the highest market values (such as Apple, Microsoft, Nvidia, etc.) will wield much more influence than smaller holdings.
So this ETF is worth considering if you'd like to give the smaller companies in the index more influence and avoid having stocks such as the Magnificent Seven dominate returns. (Of course, those stocks have been great performers over long periods, so this ETF may offset its greater diversification with somewhat lower returns.)
5. Vanguard Dividend Appreciation ETF
Finally, the Vanguard Dividend Appreciation ETF (VIG 0.16%) offers another investing strategy, focusing on companies that not only pay dividends, but ones that have increased their payouts for at least the last 10 years. Dividend payers tend to be more established than others, with relatively reliable cash flow that can fund payouts to shareholders. The top holdings (among about 315) were recently Microsoft, Apple, Broadcom, and JPMorgan Chase. The ETF's dividend yield was recently about 1.7%.
So don't worry about missing the bull market's recent recovery, because there's a good chance it will continue for a while. And what really matters is how much your investments grow between when you buy them and sell them. For best results, buy aiming to hold for a long time, and add money to your best ideas regularly.
