Investing in Exchange Traded Funds (ETF) is a great way to make instantly diverse investments with low costs and high liquidity
Our 3 favorite ETF investments are the S&P 500 (NYSEARCA: VOO), Roundhill BITKRAFT Esports & Digital Entmt ETF (NYSEARCA: NERD), and iShares MSCI KLD 400 Social ETF (NYSEARCA: DSI).
S&P 500 (VOO)
The S&P 500 S&P 500 is by far the most well-known ETF and is the most heavily-traded ETF in the world. Its concept is simple — it measures the stock performance of 500 of the largest companies listed on the U.S. stock exchanges. This ETF is extremely broad-natured and diverse and is widely used to track the performance of the U.S. stock market.
The biggest advantage of investing in the S&P 500 is the fact that it’s essentially as if you’re investing in 500 companies at once. Since its inception in 1957, the ETF has experienced an average annual return of 9.8% which has actually been closer to 14% over the last 10 years. The best way to achieve these impressive and consistent annual returns is by buying and holding long-term. Some of the S&P 500’s top companies by index weight include Apple, Microsoft, Amazon, Facebook, Alphabet (Google), Berkshire Hathaway, and Johnson & Johnson.
Roundhill BITKRAFT Esports & Digital Entmt ETF (NERD)
NERD is a relatively new ETF, having begun trading in June 2019. This ETF is the first rules-based index designed to track the performance of the electronic sports, or “esports” market, and was designed to provide investment results that closely correspond to the performance of the Roundhill BITKRAFT Esports Index. NERD tracks companies involved in video game publishing, network streaming, video game tournament and league operations, competitive team ownership, and hardware manufacturing. Some of NERD’s largest holdings are Razer, Tencent Holdings, Corsair Gaming, Activision Blizzard, and Sea Limited. Around two-thirds of the ETF’s holdings are in the Games-as-a-Service (GaaS) space.
NERD is considerably riskier than the S&P 500 but comes with the possibility of tapping into a very young market with huge long-term potential. 37% of the entire ETF’s holdings are in the games industry, for example — a market expecting to experience a Compound Annual Growth Rate (CAGR) of 13% until 2027.
iShares MSCI KLD 400 Social ETF (DSI)
The iShares MSCI KLD 400 Social ETF (NYSE: DSI) is great for those who see growth potential in companies that are making our world a greener place and helps investors introduce ethical investing to their portfolio. This fund seeks to track the results of the MCSI KLD 400 Social Index, which is made up of U.S. companies that have positive environmental, social, and governance (ESG) characteristics. Investing in this ETF allows investors to obtain exposure to a range of large, mid, and small-cap U.S. stocks that are committed to having a high ESG rating. This ETF is committed to the tech space and has holdings including Microsoft, Tesla, Visa, Facebook, Salesforce, and Procter & Gamble.
Investors can subsequently avoid exposure to companies with low ESG ratings, enabling them to make a more sustainable investment by avoiding companies that are only further damaging our environment.
The iShares MSCI KLD 400 definitely ticks all the boxes conscience wise, but it’s looking good on the financials side too, with a Net Asset Value (NAV) return of roughly 20% year-to-date, plus a relatively low expense ratio of 0.25%, half of NERD’s. Good fundamentals with investors’ and consumers’ attitudes slowly becoming more environmentally aware and proactive will help this ETF long-term.
A MyWallSt subscription gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team post daily insights, subscriber-only podcasts and the headlines that move the market. Get your free trial now!
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.