In most years, investors should expect theirto appreciate anywhere from 5% to 10%.
is even more precise, suggesting that 6% to 7% should be the norm in the years ahead (when payments are included.)
Trouble is, many mutual funds charge 1% or even 2% annual fees, which can take a decent chunk out of your returns. That's why exchange-traded ( ) have become so popular. The most expensive ETFs typically charge no more than 0.80% annual expense ratios, and the many of the most popular ETFs charge a whole less than that.
Here's a quick look at the nation's most popular ETFs, and the expense levels they carry.
Source: Morningstar.com, ETFDB.com
Let's face it, some investors just enjoy picking. They have the time and energy to continually track the and , and make portfolio adjustments on a regular .
That explains the appeal of the SPY). Investors have poured more than $100 billion into this fund, and few of this fund's holders look to sell until they need the for retirement or a major life expense such as a new home purchase.S&P 500 (NYSE:
A quick glance at this group of leading ETFs shows a decent bit of redundancy. For example, the ETF and the Core S&P 500 ETF (NYSE: IVV) have identical portfolios. There is a subtle difference, though, according to analysts at Morningstar: "Unlike S&P 500 SPY, which is a unit investment trust, this ETF is not subject to any constraints on reinvesting dividends or lending securities, tools that indexers often use to keep pace with the ."S&P 500
Still, the fact that both of thesehave delivered a 7.2% annual average return over the past five years (according to Morningstar) and both have expense ratios below 0.1% means they are virtually interchangeable.
Yet there are good reasons for spreading the emerging markets represent robust long-term growth rates. To be sure, emerging market stocks have underperformed U.S. stocks in recent years, but the fastest-growing middle classes reside far away from the U.S. and Europe.toward other types of assets as well. For example, even though they always carry short-term risk,
And even as you seek out S&P 500 ETFs as a core holding, don't forget smaller cap stocks. Small companies can deliver robust growth as they tap into underserved niches that are left unexploited by their larger, less nimble rivals. The IWM) has outperformed the mighty S&P 500 ETF on a one-year, three-, five- and 10-year , according to Morningstar.Russell 2000 (NYSE:
It's also worthwhile to check out the leading ETFs that have yet to crack the top 10 but are gaining ground. My favorites among these up-and-comers include:
- Vanguard REIT VNQ), which is comprised of our nation's largest real estate firms, and carries a quite-reasonable 0.10% expense ratio. (NYSE:
- The Vanguard Dividend VIG), which only owns stocks which have seen their dividends rise in each of the past 10 years. that you can secure better dividend yields in other ETFs. This Vanguard ETF tends to avoid higher-yielding, but often riskier stocks. And the 0.10% expense ratio is just a fraction of some other dividend-focused ETF expense loads. ETF (NYSE:
- The Energy Select Sector XLE) helps investors to from the never-ending global thirst for oil and gas. One of the reasons that Morningstar gives this ETF a five-star rating: "Firms comprising more than 85% of the value of XLE's portfolio are deemed by Morningstar's as possessing an economic moat, or sustainable competitive advantage." The 0.18% expense ratio is far lower than you find on any energy-focused . (NYSE:
The commodity. But for most investors, ETFs deliver all of the exposure you need, without those onerous fund fees.Answer: managers can still be helpful when in specific niches such as a particular country or