5 ETFs to invest in US stock market

From technology growth to value-stocks to large-caps to small caps, the US ETFs are available to keep your portfolio well-diversified.

To start investing in US stocks, the exchange traded funds (ETFs) listed on the US stock exchanges can be a good starting point. Unlike buying individual stocks, you end up buying a bunch of stocks representing either an index or a specific sector. US ETFs give you the advantage of diversifying in international stocks and also keep you diversified across various leading themes in the US stock market. From technology growth to value-stocks to large-caps to small caps, the US ETFs are available to keep your portfolio well-diversified.

You can buy ETF units all through the trading hours of the stock exchange and the cost of owning them is considerably low. Here we take a look at the top 5 US ETFs and see what they primarily consist of.

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1. SPDR S&P 500 ETF Trust (SPY)

Popularly known as the SPY ETF, the SPDR S&P 500 ETF is an ETF that tracks the S&P 500 index – an index of a diversified group of large-cap US companies across eleven major industries. S&P 500 index is widely regarded as the best single indicator of large-cap US equities and by investing in SPY ETF, you get exposure to some of the best US stocks. The top three sectors in the S&P 500 are Information Technology, Health Care and Communication Services, totalling about 50 per cent of the index, while the top three choices in the index are Microsoft, Apple and Amazon by index weightage.

2. SPDR Dow Jones Industrial Average ETF Trust (DIA)

DIA tracks a price-weighted index of 30 large-cap US stocks as represented in the Dow Jones Industrial Average (DJI) or the Dow 30. Dow 30 is a unique index and is slightly different from some of the other leading US indices. Dow 30 represents companies that are only based in the US. Unlike other indices, in Dow 30, the selection is not governed by quantitative rules or market capitalization but as per the S&P indices website, “a stock is added to the index only if the company has an excellent reputation, demonstrates sustained growth and is of interest to a large number of investors.”

3. Invesco QQQ Trust (QQQ)

If you are looking to buy the top-notch US stocks of the Nasdaq stock market, the Invesco QQQ ETF is the one to buy. QQQ is an exchange-traded fund that gives you access to Nasdaq 100 companies in a single investment. Some of the top-performing US stocks of 2020 such as Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) andGoogle (GOOGL) collectively known as FAANG stocks are a part of the Nasdaq 100 index.

4. iShares Russell 2000 Growth ETF (IWM)

If you as an investor wish to diversify across small-cap US stocks, the go-to index is the Russell 2000, comprising 2000 small capitalization companies. Getting exposure to an entire lot of Russell 2000 stocks is possible through the exchange-traded fund (ETF) – iShares Russell 2000 ETF (IWM).

5. Vanguard Total Stock Market ETF (VTI)

Vanguard Total Stock Market ETF (VTI) gives you access to the entire US equity market, including small, mid, and large-cap growth and value stocks. From Nasdaq 100, Dow 30, Russell 2000 to S&P 500 stocks, VTI gives you exposure to over 3900 stocks of the US stock market. Technology, Consumer Discretionary, Industrials, Health Care and Financials make up the five largest sectors for VTI. Some of the top holdings include Apple Inc., Microsoft Corp., Alphabet, Amazon.com Inc., Facebook Inc., Tesla Inc,, Berkshire Hathaway Inc., NVIDIA Corp., JPMorgan Chase & Co and Johnson & Johnson.

Disclaimer: The investing decision in ETFs or any other stock should be taken on your own after carefully evaluating the business and other fundamentals of the company or after consulting one’s financial advisor. It is not a recommendation to buy, hold or sell in any of the ETFs/stocks. Financial Express Online does not bear any responsibility for their investment advice.

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