The exchange traded fund (ETF) universe has basically every asset class covered. All that’s left is for you to shift through the products and pick out ones that suit your needs.
Large-Caps
Bob Wyckoff, a partner/owner at asset management firm Tweedy Browne, remarked large-cap blue chip stocks, which are relatively cheap, may begin to overshadow small-caps and mid-caps, which have shown remarkable performance in the last few years, according to Financial Advisor.
Large-caps are so appealing because they’re large companies that aren’t growing as much anymore. They can give your portfolio stability and even provide some decent dividends in a favorable environment.
- SPDR S&P 500 (NYSEArca: SPY): It’s not only the grandaddy of all ETFs, it’s the largest ETF, period. If you want exposure to the 500 largest companies and play the economic recovery, then this fund delivers it with a competitive 0.10% expense ratio.
- Schwab U.S. Large-Cap Growth ETF (NYSEArca: SCHG): Schwab’s large-cap ETF comes in with an expense ratio of 0.13%. It also gives almost the same level of exposure to large-caps that SPY does, with 432 holdings.
Mid-Caps & Small-Caps
Mid-cap ETFs have recently topped their 2007 highs, a great milestone, considering that not every sector or asset class has managed that feat yet.
Mid-caps straddle a line between large- and small-caps: they’re more established than many small-caps, so growth isn’t quite as rapid, but they’re younger than large-caps, leaving them some upside room.
Despite their high valuations, small-caps is still an integral part of a well-balanced portfolio. Andrew Braun, co-manager of the Goldman Sachs Mid Cap Value Fund, said that small- and mid-caps are continue to provide opportunities as revenues grow and margins expand.
Quincy Krosby, an economist at Prudential Financial, though, argues that small-cap and mid-cap stocks are in a good position for mergers and buyouts from cash-bloated large-cap companies.
- Direxion Daily Mid Cap Bull 3x Shares (NYSEArca: MWJ): Feeling bullish on mid-cap prospects? This fund aims to deliver 300% of the movement of the Russell Midcap Index.
- Vanguard Mid-Cap Growth ETF (NYSEArca: VOT): If you’re more in the mood to play it straight, VOT charges a 0.14% expense ratio and gives exposure to 242 mid-cap corporations in the United States.
- iShares Russell 2000 (NYSEArca: IWM): If the S&P 500 is the grandaddy of large-caps, then the Russell 2000 is the definitive small-cap index. This ETF tracks the 2,000 smallest companies that make up the Russell 3000.
- Vanguard Small-Cap Growth ETF (NYSEArca: VBK): VBK is the top-performing small-cap ETF over the last six months or so, gaining close to 30%. With an expense ratio of 0.14%, it tracks the MSCI U.S. Small-Cap Growth Index and has 1,000 components.
Max Chen contributed to this article.