Exchange-traded funds (ETFs) usually track the performance of stock market indexes or sectors, but they can also track commodities like gold and silver. In general, ETFs are a cheap and easy way to build a diversified investment portfolio.
Right now, investors should consider buying the Vanguard S&P 500 ETF (VOO 0.84%) and the iShares Bitcoin Trust (IBIT -0.37%). Purchasing one share of each will cost less than $650 at current prices, and both ETFs could deliver substantial returns in the long run.
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1. Vanguard S&P 500 ETF
The Vanguard S&P 500 ETF is an exchange-traded fund managed by Vanguard that tracks the S&P 500 (^GSPC 0.83%), which itself measures the performance of 500 large U.S. companies that account for 80% of domestic equities and nearly 50% of global equities by market value. In that sense, the Vanguard S&P 500 ETF provides exposure to hundreds of the most important companies in the world.
Here are the 10 largest holdings in the ETF, listed by weight:
- Nvidia: 7.3%
- Microsoft: 7%
- Apple: 5.8%
- Amazon: 3.9%
- Alphabet: 3.5%
- Meta Platforms: 3%
- Broadcom: 2.4%
- Berkshire Hathaway: 1.6%
- Tesla: 1.6%
- JPMorgan Chase: 1.5%
The S&P 500 achieved a total return of 688% in the last two decades, equivalent to an annual return of 10.7%. That period encompasses such a broad range of economic and market environments -- two recessions, three bear markets, and eight corrections -- that investors can be reasonably confident in similar returns over the next few decades.
Finally, the Vanguard S&P 500 ETF has a below-average expense ratio of 0.03%, meaning shareholders will pay just $0.30 annually on every $1,000 invested in the fund. For context, the average expense ratio of U.S. mutual funds and ETFs was 0.34% in 2024.
In short, the Vanguard S&P 500 ETF is a cheap and easy way to get exposure to the U.S. stock market, which itself has historically been the best-performing market in the world.
2. iShares Bitcoin Trust
The iShares Bitcoin Trust is an exchange-traded fund issued by BlackRock that tracks the prices of Bitcoin (BTC -0.86%), the largest, most liquid, and best-known cryptocurrency in the world. The iShares Bitcoin Trust is the most popular spot Bitcoin ETF, as measured by assets under management.
Investors have good reason to think Bitcoin will become increasingly valuable in the future. President Trump has ushered in a new era for the cryptocurrency industry by nominating Paul Atkins as SEC chair and Scott Bessent as Treasury secretary, both of whom have pro-cryptocurrency views. Trump also signed an executive order that established a strategic Bitcoin reserve, and lawmakers in several states have introduced similar legislation.
The changing regulatory environment could lead to federal and state governments buying Bitcoin, and that has boosted confidence among corporations and institutional investors. The quantity of Bitcoin held by public and private companies nearly doubled in the past year. Strategy (formerly known as MicroStrategy) alone owns nearly 600,000 BTC, but other companies are also adding Bitcoin to their balance sheets.
Meanwhile, the number of large asset managers (i.e., those with $100 million-plus in securities) that have positions in the iShares Bitcoin Trust nearly tripled during the past year, and the amount of money they have invested in the fund nearly quadrupled, according to recent Forms 13F. That trend is particularly encouraging because institutional investors have nearly $130 trillion in assets under management, and allocating a small percentage of that sum to Bitcoin could push its price much higher.
The iShares Bitcoin Trust has an expense ratio of 0.25%, which means shareholders will pay just $2.50 per year on every $1,000 invested in the fund. That makes it an inexpensive, easy way to get Bitcoin exposure. The ETF is also more convenient than trading Bitcoin through a cryptocurrency exchange.
