2018 has been a big year so far in the markets, and there a few standout ETFs as well. The recent volatility and political anxieties mean that many investors have turned to invest in exchange-traded funds instead of stocks. In technical terms, an ETF is a security which covers multiple index funds or a basket of related commodities.
ETFs are increasingly popular these days for two reasons: First, they are cheaper than their close cousin, mutual funds. Second, buying ETFs is an easy way to diversify your financial portfolio. ETFs exist in almost all stock markets that have an index. There is an ETF for commodities, real estate, international investments, and financial institutions. One great way for beginners to get their feet wet in the market is through an ETF, and below are some of the best ETFs in 2018.
ETFS Physical Gold Swiss Shares
It may be a mouthful, but it’s just a fancy name for an investment in gold. You may want to remember it by its symbol SGOL.
Gold can be very complicated to buy in physical form since an investor needs to arrange the transportation and storage of the precious metal. The shares might not have the exact price as real gold, but it gives an option for investors to participate in the gold economy through the securities market.
Compared to other metallic commodities, gold shows a relatively stable price. From the ancient era to the Renaissance period, gold was the main currency in the Western world. It never lost its luster in the eyes of investors throughout time. These days, gold is a reasonable choice for a lower-risk investment.
SPDR Dow Jones Industrial Average ETF
State Street Global Advisors is one of the more established ETF companies, and their most marketable ETF is DIA.SPDR Dow Jones Industrial Average ETF (DIA) tracks the Dow Jones Industrial Average. Originally, the Dow was just an index listing the best performing manufacturing industries. Now, other companies not producing manufacturing items can join this listing. Usually, the number of these companies reaches 30, but it varies according to circumstances. Examples of these companies are Apple, Coca-Cola, Boeing, Microsoft, and Walt Disney.
The performance of Dow Jones Industrials depends on the strength of public consumption of goods and services. If you think the current economy is one where people are going to spend more than save, then this investment can be a viable choice.
Vanguard S&P 500 Index ETF (VOO) is a diversified list of American large-cap stocks tracking the performance of Standard & Poor (S&P) 500 index. Stand & Poor is a key index enumerating the 500 best companies in the US. Top funds include Apple, Facebook, Microsoft, Amazon, and JPMorgan Chase & Co.
VOO’s fund’s expense ratio is about 0.04% which is lower than the average expense ratio for an ETF. The indexing methodology of this ETF is entirely passive which explains a lower expense ratio since managers do not need to trade a lot. The US stock market ties closely to the risk profile of Vanguard 500. Since it is passively managed, the manager risk is very low but still affected by other market factors. As of the moment, VOO shows excellent potential as a long-term investment if your analysis shows that the stock market will continue to grow.
iShares Global Clean Energy
The iShares Global Clean Energy ETF is an excellent investment for people want to join the effort to stop climate change.
BlackRock manages iShares Global Clean Energy ETF. Before the rebranding, iShares was called World Equity Benchmark Shares (WEBS). Each iShare tracks the list of funds in various stock exchanges in London, New York, BATS exchange, Hong Kong, Toronto, and many others.
Its manager, BlackRock, Inc. is an American multinational investment management corporation based in New York City. Now it is considered the world’s largest asset manager.
Specifically, iShares Global Clean Energy ETF focuses on the performance of the S&P Global Clean Energy Index. Usually, the companies listed here belong to the mid-cap classification in the industrial, energy, and technology sectors. To name a few, Verbund AG, Contact Energy Ltd., Meridian Energy Ltd., Covanta Holding Corp., and China Longyuan Power Group Corp. Ltd. are among the top companies held by this ETF. The companies mentioned are committed to reducing carbon emission and to combating global warming by providing renewable energy for a sustainable future. Support for these companies (and the involved ETFs by extensions) is several global organizations and funding agencies like the UN.