7 Best ETFs to Buy in May 2026

If it’s international markets you want, the iShares Core MSCI Total International Stock ETF (IXUS -0.06%) is a good way to go. The fund derives its holdings from an MSCI global index and subtracts the U.S. listings. It holds about 4,160 stocks, including large-, mid-, and small-cap companies from around the world.

The ETF offers diversified international exposure. Its top five geographies as of May 2026 were:

• Japan: 14.6% of the fund’s holdings
• United Kingdom: 8.4%
• Taiwan: 8.3%
• Canada: 8.1%
• China: 6.8%

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 3.2% based on the last 12 months of dividend payments (as of May 2026).

Tax considerations for ETFs

ETFs tend to be more tax-efficient compared to mutual funds. However, investors still need to keep taxes in mind when holding an ETF in a regular brokerage account.

Investors will pay two types of taxes on ETFs that hold stocks or bonds:

• Taxes on income: ETFs that hold dividend-paying stocks must distribute the income from those dividends to investors at least once each year. The IRS taxes Qualified dividends at the lower federal long-term capital gains rates of 0%, 15%, or 20%, while taxing non-qualified dividends and interest income from bonds as ordinary income, up to 37%.
• Taxes on capital gains: If you sell an equity or bond ETF, you’ll pay taxes on the gain depending on how long you held the fund and your annual income. ETFs held for more than a year get taxed at the lower federal long-term capital gains rates of 0%, 15%, or 20%. Meanwhile, the IRS taxes funds held less than a year at the short-term capital gains rate, which is the same as your ordinary tax rate (up to 37%).

Types of ETFs

There are several types of ETFs that investors can buy, including:

• Broad index funds: Many of the largest ETFs track a broad market index, such as the S&P 500 or the Nasdaq-100. These funds enable investors to gain diversified market exposure through a single low-cost fund.
• Sector ETFs: These ETFs focus on stocks in a specific stock market sector, such as technology, energy, or healthcare.
• Asset-focused funds: These funds invest in a specific asset class, such as government bonds, dividend stocks, small-cap stocks, or commodities.
• Thematic ETFs: Thematic funds invest in themes such as semiconductor stocks, artificial intelligence (AI), international stocks, or clean energy.