3 ETFs Smart Retirees Have in Their Portfolios

If you’re a retiree or if you’re planning to be one, it’s very worthwhile to have exchange-traded funds (ETFs) in your portfolio. Retirement is supposed to be comfortable and anxiety-free. So, instead of juggling dozens of stocks at once, you can choose to pay a small annual fee and move that responsibility over to a well-established firm. ETFs let you invest in hundreds or even thousands of stocks with the click of a button.

ETFs are both passively and actively managed, some of them with a track record of outperforming benchmarks, whereas others have dividend yields exceeding Treasuries.

And if you are a smart retiree, you wouldn’t bet the farm on just one ETF. Smart retirees usually split their money between Treasuries, ETFs, and a core group of stocks. If you hold the following three, it can give you a near optimal yield and performance over the course of your retirement:

Reaves Utility Income Fund (UTG)

Investing in utilities is one of the smartest decisions you can make in the current environment. Companies that derive their revenue from selling essential services like oil and gas distribution, electricity, water, and waste are recession-resistant and grow with the rest of the economy.

However, in the past year, utility stocks have looked even more attractive. There was a tariff scare this spring, and we may be on the cusp of another one soon if secondary tariffs are applied to China and ongoing trade negotiations aren’t resolved as expected. Utilities are almost entirely outside the purview of tariffs, as they operate domestically. And that’s not all. The current AI build-out benefits electricity distribution companies, whereas the export surge to Europe is benefiting oil and gas midstream companies.

As such, Reaves Utility Income Fund (NYSEAMERICAN:UTG) is up 19.52% year-to-date and gets you a 6.53% dividend yield. It is a closed-end fund that focuses on giving you a high after-tax income through investments in utility and infrastructure companies. It pays dividends monthly.

Here are its top 10 holdings:

The fund’s expense ratio is on the expensive side, comparatively, at 2.43%, or $243 per $10,000 invested, due to it being actively managed and using leverage. This causes the fund to incur interest expenses.

JPMorgan Nasdaq Equity Premium Income ETF (JEPQ)

The JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) is a monthly dividend ETF that gives you exposure to the Nasdaq-100 and pays dividends by writing out-of-the-money call options for more income. JEPQ’s 12-month total return of almost 18% is already better than the SPY’s TTM total return of 16.39%.

Options are only gaining more popularity, with a surge of retail investors entering the market every day. As such, I do not believe that the current increase in ETFs that use options for additional income will be out of fashion anytime soon. That said, the catch is that the returns you get from the Nasdaq-100 exposure are limited. The covered call overlay caps the upside gains in exchange for premium income.

Here are the top 10 JEPQ holdings:

The expense ratio is 0.35%, or $35 per $10,000. The dividend yield here is 9.54% and the distribution frequency is monthly.

Vanguard Information Technology Index Fund ETF (VGT)

While dividends are essential for retirees, it doesn’t hurt to have more exposure to the tech sector. Technology has been spearheading the economy for the past two decades,. It is expected to continue doing so in the future, especially as AI spills over into blue-collar work through robotics in the coming decades.

The Vanguard Information Technology Index Fund ETF (NYSEARCA:VGT) is a passively managed ETF that aims to track the performance of the MSCI US Investable Market Index/Information Technology 25/50, which is “designed to capture the large, mid, and small cap segments of the US equity universe.”

Here are its top 10 holdings:

VGT is one of the only ETFs that has managed to outperform the Nasdaq quite consistently. The expense ratio is also quite low at 0.09%, or $9 per $10,000. You also get a 0.45% dividend yield as a sweetener.

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