Exchange-traded funds (ETFs) are investment vehicles that trade like a stock but give investors ownership of a broad range of stocks or other assets. ETFs offer investors an appealing alternative to owning individual stocks.
Exchange-Traded Fund (ETF)
There are all kinds of ETFs available. Some track major indexes, such as the S&P 500 or the Nasdaq Composite. Others give investors exposure to certain parts of the world, like China or emerging markets. And some ETFs concentrate on certain sectors, such as technology or banking, or specific types of stocks, like dividend or growth stocks.
In a challenging market environment, ETFs can help reduce one considerable risk of owning an individual stock since they tend to be less volatile. Although they're similar in principle to mutual funds, they're easier to buy and trade than typical mutual funds and tend to have lower fees. If you're looking for ETFs to invest in, keep reading to see seven of the best.
Seven best ETFs
Top seven ETFs to buy now
| ETF | Ticker | Assets Under Management (AUM) | Expense Ratio | Description |
|---|---|---|---|---|
| Vanguard S&P 500 ETF | (NYSEMKT:VOO) | $764.9 billion | 0.03% | Fund that tracks the S&P 500 |
| Invesco QQQ Trust | (NASDAQ:QQQ) | $384.2 billion | 0.2% | Fund that tracks the Nasdaq-100 |
| Vanguard Growth ETF | (NYSEMKT:VUG) | $195.7 billion | 0.04% | ETF that invests in large-cap U.S. growth stocks |
| iShares Core S&P Small-Cap ETF | (NYSEMKT:IJR) | $86.0 billion | 0.06% | Fund that tracks the S&P SmallCap 600 index |
| Schwab U.S. Dividend Equity ETF | (NYSEMKT:SCHD) | $72.0 billion | 0.06% | ETF that invests in 100 high-yielding U.S. stocks with histories of increasing their dividends |
| Vanguard Total Stock Market ETF | (NYSEMKT:VTI) | $550.0 billion | 0.03% | Fund that holds more than 3,500 U.S. stocks of all sizes |
| iShares Core MSCI Total International Stock ETF | (NASDAQ:IXUS) | $50.4 billion | 0.07% | ETF that holds around 4,250 international stocks of all sizes |
ETFs 1 - 4
1. Vanguard S&P 500 ETF
Vanguard created the index fund. If you're looking for an S&P 500 index fund, the Vanguard S&P 500 ETF (VOO -2.68%) is hard to beat.
It offers a dirt-cheap expense ratio of just 0.03%, compared to the 0.22% average for similar funds. This lower expense ratio means that for every $10,000 invested with the fund, investors will pay just $3 in annual fees versus $22 in a typical competing fund.
The Vanguard S&P 500 ETF is one of the largest and most popular ETFs. It was the largest ETF by assets under management, or AUM, in October 2025. The ETF's combination of low costs and large size makes it a great choice if you're looking to invest in the broader market. Because of its history, diversification, and exposure to blue chip stocks, many investors consider it one of the best ETFs to buy and hold.
The S&P 500 has an excellent track record of delivering returns for investors. Over the last 50 years, the average stock market return, as measured by the S&P 500, has been 8% with dividends reinvested. The Vanguard S&P 500 ETF is a low-cost way to capture the market's returns.
2. Invesco QQQ Trust
If you're looking to gain exposure to big tech stocks, Invesco QQQ Trust (QQQ -3.46%) is an excellent choice. The ETF tracks the Nasdaq-100 index, which includes 100 of the Nasdaq's largest nonfinancial companies.
The top stocks in the ETF are Nvidia (NVDA -4.84%), Apple (AAPL -3.4%), Microsoft (MSFT -2.17%), Broadcom (AVGO -5.9%), and Amazon (AMZN -4.97%). As one of the best-performing ETFs, it boasts an affordable expense ratio of 0.2%.
As of October 2025, the Invesco QQQ Trust had generated a total return of around 536% over the past decade, easily outpacing the S&P 500's roughly 315% return. A $10,000 investment made in the Invesco QQQ Trust 10 years ago would be worth more than $63,600 today.
The Nasdaq-100's focus on innovative technology companies positions it to continue delivering strong total returns, especially as artificial intelligence (AI) accelerates growth in the tech sector in the coming years.
3. Vanguard Growth ETF
If you want to invest in growth stocks but don't want to be an active stock picker, the Vanguard Growth ETF (VUG -3.28%) makes that easy. The ETF holds large-cap growth stocks and tracks the CRSP US Large-Cap Growth index.
Like Invesco QQQ Trust and Vanguard S&P 500, the Vanguard Growth ETF's biggest holdings are Nvidia, Apple, and Microsoft. The growth-focused ETF also held many other growth stocks among the roughly 165 companies in the fund as of October 2025.
The Vanguard Growth ETF offers a rock-bottom expense ratio of just 0.04%. Its low cost makes it a good deal for anyone looking for a growth stock ETF.
4. iShares Core S&P Small-Cap ETF
The iShares Core S&P Small-Cap ETF (IJR -3.12%) provides broad exposure to small-cap stocks. Small caps tend to be more volatile than the broader market because they may not be profitable or as financially strong as their large-cap counterparts. As a result, small caps tend to be riskier during a downturn because they may not have the same access to capital.
This ETF helps mute some of that risk by owning a large basket of small caps. As of October 2025, it held nearly 650 stocks and had a fairly low concentration of holdings. Its top 10 holdings made up about 6.5% of the total. The ETF has a very low expense ratio of 0.06%, making it a low-cost way to add some small-cap exposure to your portfolio.
ETFs 5 - 7
5. Schwab U.S. Dividend Equity ETF
Dividend stocks are great long-term investments. Over the last 50 years, dividend-paying companies outperformed those that don't pay dividends by more than 2-to-1 (9.2% average annual total return versus 4.3% for dividend nonpayers). The best performance came from dividend growers and initiators (10.2% versus 6.8% for companies with no change in their dividend policy).
The Schwab U.S. Dividend Equity ETF (SCHD -1.7%) provides exposure to high-yielding U.S. stocks with a history of growing their dividends per share. It tracks an index (Dow Jones U.S. Dividend 100) that measures the performance of 100 top dividend stocks based on several quality characteristics. Among its 10 largest holdings in mid-2025 were notable dividend payers Verizon (VZ -0.71%), Altria (MO 1.25%), and Chevron (CVX -1.68%).
The ETF offers a relatively attractive dividend yield. As of September 2025, it had a trailing-12-month yield of 3.7%, more than triple the 1.2% dividend yield of an S&P 500 index fund. And thanks to its low expense ratio of 0.06%, investors get to keep more of the dividend income that the ETF produces. The fund should also deliver price appreciation as the underlying companies grow their earnings and dividends.
6. Vanguard Total Stock Market ETF
Although the S&P 500 is considered a broad-market index, it gives you exposure to only 500 large-cap U.S. stocks. If you want to own all the stocks in the U.S. market, the best way to do it is through a total stock market fund such as the Vanguard Total Stock Market ETF (VTI -2.69%).
As of October 2025, the fund held more than 3,500 stocks, including large-cap, mid-cap, and small-cap stocks. Because its holdings encompass the S&P 500, its largest positions are the same as for the broad market index.
Vanguard Total Stock Market ETF aims to track the CRSP US Total Stock Market index. Like other Vanguard funds, its low expense ratio of 0.03% makes it an affordable way to invest in the entire U.S. stock market through one ETF.
7. iShares Core MSCI Total International Stock ETF
If it's international markets you want, the iShares Core MSCI Total International Stock ETF (IXUS -2.27%) is a good way to go. The fund derives its holdings from an MSCI global index and subtracts the U.S. listings. It holds more than 4,200 stocks, including large caps, mid caps, and small caps from around the world.
The ETF offers diversified international exposure. Its top five geographies as of October 2025 were:
- Japan: 14.7% of the fund's holdings
- United Kingdom: 8.9%
- China: 8.5%
- Canada: 8.1%
- Taiwan: 6.1%
The iShares Core MSCI Total International Stock ETF allows you to invest globally at an affordable expense ratio of 0.07%. It also has an attractive dividend yield of 3%, based on dividend payments over the last 12 months (as of mid-2025).
Related investing topics
Should I invest?
Should you invest in ETFs?
Exchange-traded funds can work for almost any kind of investor, regardless of your investing style or the type of stocks you're looking to invest in. Hundreds of ETFs offer exposure to a wide range of sectors and different investing goals, such as dividends or growth. These funds have several benefits, including:
- Potentially lower risk and volatility compared to investing in individual stocks
- A passive investment with a low management fee
- Ability to invest broadly in a sector or trend through a simple investment vehicle
However, there are also some drawbacks to investing in ETFs that investors need to consider, including:
- They have the potential to underperform a portfolio of individual stocks.
- The higher management fees of some funds can eat into their returns.
- Leverage and other factors can cause some funds to deliver poor long-term performance.
For most investors, holding at least one or two high-quality ETFs makes sense, especially if you want to eliminate some of the work of picking individual stocks. The list above offers a good start if you're looking for some of the best ETFs to buy.
FAQ
Buying the best ETFs: FAQ
What is the best ETF to buy right now?
There are lots of good ETFs to buy in any market environment. In October 2025, the Schwab U.S. Dividend Equity ETF looked relatively more attractive than other top ETFs.
Its price had underperformed the market over the past year (down 3% over the past year by early October, compared to an almost 17% increase for the Vanguard 500 ETF and a rally that topped 23% in Invesco QQQ Trust). The dividend-focused ETF offers an attractive dividend yield (almost 3.8%) and strong long-term appreciation potential. As its holdings grow their earnings, it should support rising dividends for fund investors.
What is the most successful ETF?
The most successful ETF over the last 10 years is the VanEck Semiconductor ETF (NASDAQ:SMH). The fund focuses on semiconductor stocks and has delivered a 28.2% average annualized total return over the past decade. Of note, four of the 10 best-performing ETFs over the last decade focused on semiconductors, while all the top 10 performers focused on technology stocks.
Are ETFs best for beginners?
ETFs are great for beginners because they take the guesswork out of picking individual stocks. The best ETF for beginners is one focused on the broader market.
Top options include the S&P 500-focused Vanguard 500 ETF or the even broader Vanguard Total Stock Market ETF. Both own hundreds of stocks, have low expense ratios, and provide investors instant exposure to a diversified portfolio of stocks for a very reasonable cost.
Are ETFs still a good investment?
ETFs can be very good investments. Many ETFs enable you to invest passively in a broader stock market index at a low cost, allowing you to earn market returns.
Other ETFs are great options for those seeking passive income from dividend stocks or bonds. ETFs can also help investors earn market-beating returns by investing in a sector or group of stocks growing at above-average rates (like semiconductor or technology stocks).
What ETF pays the highest dividend?
According to data from ETFdb.com, dozens of ETFs offer dividend yields in the double digits as of mid-2025. However, many of the ETFs with the highest dividends are very small leveraged ETFs, making them exceptionally risky.
Even so, a couple of high-dividend ETFs stand out for yield-seeking investors: the Global X Nasdaq 100 Covered Call ETF (NASDAQ:QYLD) and the JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ). Both used a covered call strategy to generate options income on a well-known market index (Nasdaq-100), enabling them to pay yields of about 10%.
Are ETFs safer than stocks?
Some ETFs are safer than stocks. For example, a broad market ETF like the Vanguard S&P 500 ETF or the Vanguard Total Market ETF holds 500 or more stocks. That provides investors with a lot more diversification than they'd typically have in a portfolio of stocks they selected. Meanwhile, some ETFs invest in lower-risk assets like bonds or dividend-paying stocks.
However, some ETFs are riskier than stocks. For example, a leveraged ETF can be very volatile. And some ETFs invest in riskier assets like commodities (oil and natural gas) using futures contracts, which are costly to manage, affecting the fund's long-term returns.
