If you are looking to invest in the stock market, you will find many options like stocks, mutual funds, bonds, exchange traded funds etc. Out of these, ETFs are the most diverse, because these funds hold stocks from a variety of sectors and hence provide maximum protection for investors from the risks and unpredictable character of the stock market. However, choosing a proper ETF can become difficult if you are not clear on what you want your investment to do. There are different kinds of funds for different types of investments. If you are looking for handsome returns in the long term, the following large –cap funds should be your obvious choices.
Great selection of stocks
If you want to invest in a big ETF that has exposure to some of the biggest stocks in the market so that you can be assured of great returns, you must invest in the Vanguard Growth ETF (VUG, Financial). As the name indicates, the stocks held in this fund have immense growth potential so that it adds value to investors’ worth. Currently there are around 371 companies from different sectors in this fund. The worth of assets is a whopping $17.5billion and the expense ratio of this fund is quite cheap at 0.09%. Though this fund invests in lots of sectors, a majority or close to 44% of the portfolio is held in stocks belonging to technology and consumer services. Other sectors that contribute to a smaller portion of the fund’s holdings are healthcare (13%), financials (13%), industrials (12%), consumer goods (10%), oil & gas (6%) and others like telecommunications, utilities and basic materials (in total 2%). Some of the top stocks that the fund holds are Apple (AAPL, Financial), Google (GOOG, Financial), Coca Cola (KO, Financial), Facebook (FB, Financial) and Walt Disney (DIS, Financial). Over the last five years, the fund had returned an impressive 17.30% on an average annually to its shareholders.
Focus on stocks that pay out consistent dividends
Sometimes, the dividend stocks that you choose may stop paying you dividends abruptly due to bad financials, recessions, market factors etc. The whole purpose of investing in these stocks gets defeated then. To save yourself from all these disappointments, you should invest in an ETF that focuses exclusively on stocks that pay out continuous dividends, irrespective of the market situations. One such powerful ETF is the PowerShares S&P 500 High Quality Portfolio ETF (SPHQ, Financial). This fund holds only those stocks that are considered great for income investors. The best part is that, the stocks in this fund are regularly checked and evaluated by the world’s top rating agency, Standard & Poor. Currently, the fund has assets worth $550million and is affordable to hold at an expense ratio of 0.29. Over the last 5 years, the fund has been returning an average of 18.67% to investors every year.
Some of the top stocks held in this fund are Walt Disney, UnitedHealth Group Inc. (UNH, Financial), Ecolab (ECL, Financial), Ross Stores (ROST, Financial), Hormel Foods (HRL, Financial), Yum Brands (YUM, Financial) and Lorillard Inc. (LO).
Conclusion
These ETFs are great choices if you are looking for long term returns on your investment. The quality of stocks held in these ETFS is very high and they are backed up by excellent market performances. For the last five years, these ETFs have consistently outperformed the S&P 500 Index, thereby guaranteeing investors of handsome and secured returns in the future as well.
