Looking overseas, investors can consider Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) as a way to access growing emerging economies. Whiles these economies can experience larger swings than developed markets, these emerging countries show attractive demographic trends, with large young populations and rising middle class. In contrast, many developed economies are seeing an aging population. VWO has a 0.15% expense ratio and tracks 935 stocks from a range of developing countries. [Core ETF for Investors, but Traders Still Love EEM]
As a way to balance out risk in the equities market, bond ETFs provide a more conservative play. For instance, the iShares Core U.S. Aggregate Bond ETF (NYSEArca: AGG), which tracks a selection of U.S. Treasuries, mortgage-backed securities, agencies, and corporate bonds, provides income and exposure to high-quality debt. AGG has a 0.08% expense ratio, a 2.01% 30-day yield and 2,635 bond holdings.
Additionally, with the U.S. economy recovering, inflation will rise and eat away at bond returns. Investors can look for Treasury Inflation Protected Securities to help hedge inflationary pressures since the bonds adjust their value along with inflation. The Vanguard Short-Term Inflation-Protected Securities ETF (NYSEArca: VTIP) has a 0.10% expense ratio and a 1.11% 30-day SEC yield. [Fight Back Against Inflation with TIPS ETFs]
For more information on investing with ETFs, visit our ETF 101 category.
Max Chen contributed to this article.