3 ETFs Every Investor Should Consider Right Now

There are reasons why investors of all stripes may want to consider exchange traded funds (ETFs). These investment vehicles, typically used by passive investors as a way to gain ultra low-cost exposure to a broad basket of stocks, are also utilized by active investors looking to gain outsized exposure to a sector or trend. There are a wide range of ETF offerings out there, from index ETFs (tracking some of the broadest groupings of stocks) to single-stock ETFs, and everything in between. 

For long-term investors thinking about how to navigate this current macroeconomic environment, there are plenty of factors to consider when thinking about which ETFs may meet one’s investing goals. Indeed, every investor is unique, with their own independent set of criteria they may have for how they want to invest. Whether that’s investing timeline (how much time they think they will want to stay invested before pulling out capital for use in retirement) to risk level, these ETFs may not be for everyone.

That said, I’ve picked three top ETFs I think most investors across the spectrum can get behind. 

Here’s why I think these particular exchange traded funds are ones most investors should consider right now. 

Vanguard S&P 500 ETF

Let’s start with the ETF most investors may have heard of, and one of the largest by total assets under management in the ETF world. The Vanguard S&P 500 ETF (VOO) is a top ETF holding for millions of Americans, with VOO remaining among the top index funds investors continue to hold for two key reasons.

The first is this ETF’s ultra-low-cost expense ratio of just 0.03%. That’s the lowest expense ratio I’ve seen in this space, and is a testament to both the size of this fund, and the ability of the Vanguard team to do everything they can to minimize and automate just about every aspect of the investing process for its millions of customers.

The second key factor I think is most important for long-term investors in VOO is the fund’s incredible diversification it provides. By tracking the S&P 500 to almost perfection, investors who buy VOO gain essentially the exact same returns as the headline S&P 500 on a daily basis. In other words, instead of trying to beat the benchmark, investors can simply buy the benchmark itself. For most investors, this is the preferred way to go – and even investing gurus such as Warren Buffett have gotten on this train in recent years. 

Vanguard Utilities Index Fund ETF (VPU)

Next on this list of top ETFs I think most long-term investors can get behind is the Vanguard Utilities Index Fund ETF (VPU). As its name suggests, this ETF tracks the utility sector, or companies that provide the sort of essential services (electricity and natural gas) which power homes and provide the heating and cooling needed to live a comfortable life.

Given the essential nature of the services utilities giants provide, this is an ETF that’s broadly considered to be one of the most defensive when compared to other sector ETFs which carry much higher betas. In other words, no matter the direction the broader market moves, utilities companies tend to produce earnings growth. That’s because there’s some level of prescribed increases these companies can push forward through regulators on an annual basis (or longer), allowing for consistent and stable cash flow growth over time.

Thus, for investors who believe we could be entering a period of turmoil, this is a top ETF I think is worth considering. Personally, this is an ETF I have continued to add to through this turmoil, and will likely continue to add to in the years to come. 

As a cherry on top, the VPU ETF has performed essentially as well as the S&P 500 in recent decades, signaling just how valuable this earnings stability can prove to be over very long periods of time. I’m looking to hold this position for the next 30 years, and view this holding much in the same way as I do VOO. 

Schwab U.S. Dividend Equity ETF (SCHD)

Finally, for dividend investors looking for exposure to the highest-quality income-producing names in the market, the Schwab U.S. Dividend Equity ETF (SCHD) is a great option worth considering. 

This particular ETF focuses on companies that have provided more than 10 years of consecutive dividend payouts. In other words, for investors looking for consistent and reliable income in retirement, owning high-quality dividend-paying stocks in a widely-diversified basket such as SCHD may be considered a preferential way to go.

Again, this is one of my top ETF holdings, and I’m looking at this fund as a way to supplement my income when the time comes to retire. I’m still a few decades out, but it’s never to early to start investing in dividend stocks. And if interest rates continue to trend toward zero (as they have for the past four decades), there’s a solid reason to believe that these holdings should trend much higher over the near- to medium-term as well.