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The world’s largest exchange-traded funds (ETFs) manage assets that run into the hundreds of billions of dollars, making ETFs one of the most popular ways to invest. ETFs are a great way for even new investors to generate attractive returns, even without much investing knowledge.
Here are the world’s largest ETFs and whether you should invest in them.
The world’s largest ETFs by assets
| Fund (ticker symbol) | Assets under management | Expense ratio | 10-year average annual returns |
|---|---|---|---|
| Source: ETF.com, as of April 5, 2024 | |||
| SPDR S&P 500 ETF Trust (SPY) | $530.7 billion | 0.095% | 12.7% |
| iShares Core S&P 500 ETF (IVV) | $451.0 billion | 0.03% | 12.7% |
| Vanguard 500 Index Fund (VOO) | $434.3 billion | 0.03% | 12.7% |
| Vanguard Total Stock Market ETF (VTI) | $388.5 billion | 0.03% | 12.1% |
| Invesco QQQ Trust (QQQ) | $258.3 billion | 0.20% | 18.5% |
| Vanguard FTSE Developed Markets ETF (VEA) | $131.1 billion | 0.05% | 4.9% |
| Vanguard Growth ETF (VUG) | $118.1 billion | 0.04% | 14.9% |
These ETFs are all index funds, a special category of funds that invests in a preset index of securities rather than trying to actively choose investments. The goal of an index fund is to “be the market” rather than “beat the market” by actively choosing stocks. The passive approach can work well – see the strong double-digit returns from most of these funds over the last decade – and it keeps costs low for investors, too, as shown by the low expense ratios here.
The three largest funds all track the Standard & Poor’s 500 Index, a collection of hundreds of America’s top companies. This index has gone up an average of 10 percent over long periods, though it’s beaten that average lately. Other popular funds are based on indexes tracking the Nasdaq 100, international stocks and growth stocks. By buying these funds you own a piece of the individual stocks comprising them.
All these funds also offer broad diversification, investing in many stocks across industries. This kind of diversification helps reduce your risk as an investor, even if they can still fluctuate a lot.
So the big appeal for investors in owning large funds such as these is to earn attractive returns with low management fees. And you can do so without having to do much research and analysis on them either, as you would need to do when you invest in individual stocks.
Should you invest in the largest ETFs?
As you can see, the largest ETFs manage a lot of money, but their size doesn’t necessarily make them the best performers, though they do quite well. For example, the Vanguard FTSE Developed Markets ETF has 10-year returns that drastically lag other names on this list.
You may be able to find other strong returns by looking at the best index funds or the best ETFs.
It’s also worth noting that these funds invest in the stock market’s largest companies, the large caps such as the Magnificent 7 stocks. If you want to invest in smaller companies – for example, because you need to diversify your investments – then you might want to look elsewhere.
Other sources of attractive returns may be found in funds that invest in specific areas of the market such as the best small-cap ETFs or the best mid-cap ETFs. These sectors – which include stocks that are smaller than most in the largest ETFs – may perform well when the larger stocks are out of favor, but you’ll need to do research to find the top-performing ETFs.
So the mere fact that these funds are large doesn’t mean they’re worth your investment. But the track records here are enviable and these funds own some of the world’s strongest companies. Then it’s not surprising that legendary investor Warren Buffett has long recommended that most investors would be better off buying an S&P 500 index fund and then holding on over time.
The best brokers for ETFs can help you find attractive funds with strong long-term returns, too.
Bottom line
The world’s largest ETFs tend to track some of the most popular stock indexes such as the S&P 500 and the Nasdaq-100, making them great ways to gain exposure to these indexes. But their size alone does not make the funds an attractive buy, and investors should look at the funds’ long-term performance and cost to help determine whether to invest their money.
Working with a financial advisor can help you find the best investments for your needs. Bankrate’s financial advisor matching tool can connect you to qualified professionals in minutes.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.
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