The Top 5 ETFs You Should Buy Now

By Qiana Chavaia on 9 December 2014 0 comments

Since their launch just a couple of decades ago, Exchange Traded Funds have quickly grown in popularity among investors due to their low expense ratios, tax efficiency, and potential for easy diversification. Today, there are more than 5,000 domestic and international ETFs trading in the global marketplace, holding baskets of assets such as stocks or bonds across a wide variety of sectors.

As with any investment, the funds you choose should be reflective of your risk-tolerance and investment goals. That said, we've rounded up a few ETFs we believe are worth a look, based on today's market conditions and performance.

Here are the top 5 ETFs you should own now.

VTI Vanguard Total Stock Market

VTI invests in large, mid, and small cap stocks, and tracks the overall stock market. It's an ideal fund for investors new to ETFs, since it provides ample diversification through broad stock market exposure. It's returns are nothing to sneeze at, either; for 2014, it's offered over 12% gains year-to-date, and posted a whopping 33% return in 2013. And with its strong 4-star Morningstar rating, it also balances its rewards with suitable levels of risk.

VOO Vanguard S&P 500

VOO invests in stocks in the S&P 500 Index, tracking the performance of some of the largest U.S. companies. This low-cost fund has high potential for growth, but potentially greater volatility than VTI. Still, it also has a solid 4-star Morningstar rating, indicating reasonable levels of risk for its year-to-date returns of nearly 14%.

VNQ Vanguard REIT ETF

VNQ invests in stocks issued by real estate investment trusts (REITs), companies that purchase office buildings, hotels, and other real estate property. Use it to diversify the risks of stocks and bonds in your portfolio. REITs can offer good long-term returns and offer a hedge against inflation because real estate values tend to rise with inflation. The 4-star rated fund has delivered returns in excess of 27% year-to-date.

MUB iShares S&P National AMT

MUB iShares provide exposure to more than 2,000 US municipal bonds, with top holdings in California and New York. The fund offers growth potential with lower volatility, making it ideal for long-term growth investment goals. In 2014, this 4-star rated fund has delivered returns in excess of 8%. This is a tax-efficient bond fund which can help hedge your equity exposure.

TDN Deutsche X-trackers 2030 Target Date

TDN is a hybrid ETF that invests in both domestic and international stocks, bonds, currency, and commodities, with the majority of its holdings in U.S. based stocks. This target-date fund is designed for those seeking retirement in the year 2030, and automatically rebalances its holdings' risk profile as you approach your 2030 retirement. DTN is a low-cost fund with broad diversification that has realized annual returns in excess of 15%.

Do you have a favorite ETF not listed here? Tell us what your hottest ETF picks are!

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