What You Should Expect From The Top 10 ETF’s in the U.S.


ETF’s in the U.S. have great histories, but we aren’t concerned about that… All we want to know is how they will perform in the future. Not many people understand just how great ETF’s can be, the top 10 ETF’s in the U.S. can be some of the highest returning assets on the market over time.

What can you expect from the top 10 ETFs on the U.S. market? You can expect a low risk investment that returns between 7% to 10% per year. This is typical for most ETF’s during a bull market, however with market conditions in 2020 being very volatile, you need to make sure your ETF still beats the market.

There is a wide selection of ETFs in this list that meet a number of different objectives. They are not only what I believe to be the best returning ETFs, but also great long-term opportunities to save for retirement. These are low risk ETFs that offer investors diversity over a well balanced portfolio.

I don’t suggest you go out and pull every single one of these ETFs into your portfolio. Instead, read on and discover what these ETFs are looking to offer investors for the future, and what makes them good picks for your investments.

You can buy any of these ETFs on their respective major exchanges, just like with stocks, you will buy shares in the fund.

Top 10 ETFs 900x900

Expectations of the Top 10 ETF’s

#1. Vanguard S&P 500 ETF

If you simply want to match the market, you can do it with the S&P 500 index ETF.

  • Type of ETF: Large-Cap Blend Stocks
  • Market Value: $130.9 billion
  • Expense Ratio: 0.03%
  • Dividend Yield: 1.74%

This is one of the worlds best known ETFs. The fund tracks the biggest 500 companies based in the U.S. and that trade on American exchanges, and because it captures a wide range of industries, it is considered an excellent baseline for the U.S. stock market.

The fund focuses on large cap value stocks, recently allocating 23% of it’s assets in the technology sector.

Growth of $10,000 in 5 years:
ETFStart20162017201820192020
Vanguard S&P 500 ETF (VOO)$10,000$11,543$13,691$16,124$16,809$19,345
Source: Vanguard Investor Website

The ETF has grown at an accelerated pace over the last 5 years due to the large tech companies making massive competition which has lead to increased sales revenue from the public.

A Look to the Future for the Vanguard S&P 500 ETF
P/E RatioP/B RatioReturn on EquityEarnings Growth RateRisk
26.43.620.1%14.4%Medium/High
Source: Vanguard Investor Website October 2020

Vanguard have great confidence in this ETF, and over a longer period of time expect it to grow along with the U.S. economy. However, don’t be discouraged if the ETF’s value drops in the short term, as the stock market tends to move in cycles.

Because the funds main focus is to follow the S&P 500 index, and in turn focuses on stocks in particular industries, it may underperform the overall market some years. But if by investing in the 500 largest companies in the U.S., it will catch up.

Going forward… I believe this ETF to continue steady growth. Because it follows the S&P 500, which is the best indicator to the health of the U.S. economy. I base my opinion on the inevitable growth of U.S. based companies, which fuel the growth of the U.S. economy.

#2. Distillate U.S. Fundamental Stability & Value ETF

This is a more detailed fund that also focuses on the S&P 500, but it weeds out the expensive, or declining stocks… And looks for value in through solid balance sheets and consistent cash flow.

  • Type of ETF: Value Stocks
  • Market Value: $60.6 million
  • Expense Ratio: 0.39%
  • Dividend Yield: 0.3%

This is a very young ETF, which was created in October 2018. Making it too soon to give details about the past 5 years gains… But, over it’s first year trading it returned 34.91%, and is looking to do similar this year.

In the same time period from 2018 to now, similar ETFs in the same category as DSTL only returned 13.45% on average per year.

Growth of $10,000 in 5 years:
ETFStart20162017201820192020
Distillate U.S. Fundamental Stability & Value ETF (DSTL)$10,000N/AN/AN/A$12,026$16,224
Price: August 1st of Year

Massive early growth of the ETF has lead to a lot of excitement about its future. Because it seeks to find value among U.S. companies it gives investors great confidence about the funds mentality when it comes to buying stocks.

A Look into the Future for the DSTL ETF
P/E RatioP/B RatioReturn on EquityEarnings Growth RateRisk
N/AN/A35.52%15.50%High
October 2020

Even though the risk level of this ETF is high I would still hold it as a lot of their investment principals align with my own. Value investing can be risky, as not everyone see value in the same place, but I would hope that with the brief track record we have available, it continues into the future.

This ETF could experience very high levels of volatility in the short term. Unfortunately some of the companies in this ETFs portfolio will not do welL. But, the experience the fund managers have will attest to the potential of massive long term returns.

#3. iShares Edge MSCI Min Vol USA Small-Cap ETF

Running with small cap stocks can reward more adventurous investors. However individual stocks lack the protection of diversity, so an ETF is way to go for safety.

  • Type of ETF: Small-Cap/Minimum-Volatility Stocks
  • Market Value: $481.9 million
  • Expense Ratio: 0.20%
  • Dividend Yield: 1.92%

Because this ETF focuses on small cap stocks it can be very unpredictable and risky, but by sticking to low volatility stocks it can be safer than others in the same category.

Again this is a young ETF, only being created in 2016. Since inception it has gained a 24.63% cumulative return, which has obviously tailed off in 2020.

Growth of $10,000 in 5 years:
ETFStart20162017201820192020
iShares Edge MSCI Min Vol USA Small-Cap ETF (SMMV)$10,000N/A$11,251$13,529$14,223$13,089
Price: September 1st of Year

Big growth early on boosted investor confidence in the managers, but with 2020 hitting hard, they have done well to recover to the position the ETF is in now.

A Look into the Future for the SMMV ETF
P/E RatioP/B RatioReturn on EquityEarnings Growth RateRisk
18.622.039.31%12.48%High
October 2020

As mentioned small cap stocks are always risky, and as shown by 2020, they don’t fair to well during hard times. What maybe saved this ETF and brought it back to quick is the high amount of health care stocks it holds. Over 16% of its holdings are in health care, which is followed by financials and tech.

The industries this ETF is involved in are quite interesting. I would keep a close eye on the banks, real estate, and health care sectors, as these make up 40% of the portfolio. These are the types of companies that can either perform really well, or suffer because of recent struggles the world is facing.

In the short term, I would hope because of the large proportions of health care stocks that this ETF will do quite well due to pandemic going on. However longer term issues arise when the banks and financial services are considered as they are already struggling to cope with the loan defaults, which are also due to the pandemic.

#4. Invesco KBW Bank ETF

This ETF only invests in stocks in the financial industry, making it very un-diverse.

  • Type of ETF: Financial/Bank Industry Stocks
  • Market Value: $606.4 million
  • Expense Ratio: 0.35%
  • Dividend Yield: 2.86%

Investing in an ETF focused on one industry is not usually a good idea, but this ETF has been very consistent up to the 2020 drop. So for a low yield return to diversify your overall portfolio, this might be a good choice.

Growth of $10,000 in 5 years:
ETFStart20162017201820192020
Invesco KBW Bank ETF$10,000$10,768$13,799$13,385$14,779$10,747
Price: November 1st of Year

As you can see 2020 hit the ETF hard, but there was consistent steady growth from the fund in previous years. In fact, from 2011 when the price of a share in the ETF was under $20, it has since spiked at $59.88, and is holding at just over $40 per share after the correction.

A Look into the Future for the Invesco KBW Bank ETF
P/E RatioP/B RatioReturn on EquityEarnings Growth RateRisk
12.530.857.06%10.13%Medium
October 2020

The banks are going to be hit hard by Covid-19, mainly because less people are applying loans and mortgages. But mostly, because the people who already have loans and mortgages, can’t afford to pay them.

A good indicators on how the banks will do is the housing market, if housing is still doing well the banks will prosper. However if housing declines, it means less money is being held in mortgage debt, and that means less interest payments for banks.

It might take a long time, but the banks are going to bounce back from this pandemic, and the historic data we have shows they are capable of steady and consistent growth. In the short term however, the financial industry is going to be a very volatile area which I would stay away from if you are risk averse.

#5. Legg Mason Low Vol High Dividend ETF

A very popular choice among dividend investors as the high dividend yield mixed with the low volatility nature of the ETF hits a sweet spot.

  • Type of ETF: Low Volatility Dividend Stocks
  • Market Value: $716.58 million
  • Expense Ratio: 0.27%
  • Dividend Yield: 3.60%

The low volatility dividend stocks this ETF focuses on leads to sow growth of value but larger input of disbursements, meaning you can grow your position without giving anymore money. This ETF is seen as a good low risk option to add to a wider portfolio.

Growth of $10,000 in 5 Years:
ETFStart20162017201820192020
Legg Mason Low Vol High Dividend ETF (LVHD)$10,000$11,731$13,399$12,690$15,553~$13,773
Price: December 31st of Year

Steady growth (except from the 2020 disaster) shows this ETF is committed to investors. After only being created in 2015, the fund managers have a great strategy while also preserving a low risk nature. Highly invested in utilities and consumer staples, both needed year round and that give modest returns.

A Look into the Future for the Legg Mason Low Vol High Dividend ETF
P/E RatioP/B RatioReturn on EquityEarnings Growth RateRisk
16.504.1012.39%22.57%Low/Medium
October 2020

Having relatively average Beta, Sharpe, & R-Squared ratios, this ETF is inline with the overall market. Having a Beta ratio of 0.76 shows the investments made by the fund have been 24% less volatile that the benchmark of the market.

Also the R-Squared value of 0.82, shows a great linear relationship between the fund and it’s benchmark. According to different investor news blogs, this R-Squared value is due to get even closer to 1 in the new year. This tells us the managers are executing investments just like they planned, which is great for low risk opportunities.

The only draw back to this fund is the large amount in utilities. Coming to the end of the stock market cycle, energy and utilities tend to do better than average. But going forward, I would like to see the ETF move away from fossil fuels and utility companies, simply because I can see a lot more competition coming down the line for these types of companies. However, for a low risk return this is a good choice.

#6. John Hancock Multifactor Consumer Discretionary ETF

Consumer products that aren’t necessarily needed… It is a massive sector filled with loads of competition. The U.S. consumer is more confident spending money now than ever before.

  • Type of ETF: Consumer Discretionary Industry Stocks
  • Market Value: $42.4 million
  • Expense Ratio: 0.40%
  • Dividend Yield: 1.20%

Because the consumer discretionary sector is so huge, it is no wonder why this ETF has been doing so well. Because the U.S. consumer is spending more money than ever before, and there is no reason why this will change, these consumer discretionary sector is looking very healthy.

Growth of $10,000 in 5 Years:
ETFStart20162017201820192020
John Hancock Multifactor Consumer Discretionary ETF (JHMC)$10,000$10,260$11,771$12,977$14,520$16,770
Price: September 30th of Year

This ETF has not performed as well as others in the same category, actually, against the benchmark Russell 1000 Ind/Cons Dis TR USD index, the ETF has underperformed massively. The index value at September 30th 2020 was over £22,000, whereas this ETF was only $16,770.

A Look into the Future for the John Hancock Multifactor Consumer Discretionary ETF
P/E RatioP/B RatioReturn on EquityEarnings Growth RateRisk
31.585.4165.58%10.89%High
October 2020

The major problem with the consumer discretionary sector is consumer debt. If we continue to see consumer debt rise, less and less people will have disposable income to spend on unneeded products.

Also being a relatively high risk ETF, because of the seasonal volatility surrounded by consumer goods, the managers of the ETF need to be on the ball all the time.

In the short term I believe this ETF to be a good choice for quick growth as people are stuck in their houses buying stuff on Amazon. However, the more the economy declines and the higher consumer debt gets, the less growth we will see from this industry.

#7. iShares Evolved U.S. Healthcare Staples ETF

Another industry specific ETF here, focusing on the healthcare industry, which could see massive growth inline with current events.

  • Type of ETF: Healthcare Industry Stocks
  • Market Value: $9.60 million
  • Expense Ratio: 0.18%
  • Dividend Yield: 1.40%

This is another sector that will live and die by political movements. Any restriction or legislative changes can cause massive swings in value in the healthcare industry. But we are in a hot spot right now because of the Covid-19 virus.

Growth of $10,000 in 5 Years:
ETFStart20162017201820192020
iShares Evolved U.S. Healthcare Staples ETF (IEHS)$10,000N/AN/A$12,083$11,729$13,975
Price: September 30th of Year

Being created in early 2018, the fund has seen a considerable growth in value. Only having $9 million in holdings, this healthcare ETF has 11% of holdings in United Health Group, 9% in Abbott Labs, and 7% in Medtronic. This is quite a lot of cash to be held in 3 companies.

A Look into the Future for the iShares Evolved U.S. Healthcare Staples ETF
P/E RatioP/B RatioReturn on EquityEarnings Growth RateRisk
30.594.3119.46%14.24%Very High
October 2020

This fund is classes as a very high risk because it’s healthcare. Healthcare is a very volatile area which can be effected by a multitude of factors.

If the Democrats manage to gain power in 2020, this will have a massive impact on the healthcare industry, most likely a negative impact. Any political change in America has an impact on healthcare mainly because it is a massive issue among the majority of the American population.

Then we have Covid-19… It has become a race for a vaccine, and there will probably be quite a few to choose from. But if the Governments of the world choose to subsidise these vaccines for the people, the companies with Government approved vaccines will do a lot better than those that don’t.

The healthcare industry has a lot of unknowns and too many variables to make a solid prediction of what could happen, it could literally go either way. A broad healthcare ETF such as this is the best way to invest in the healthcare industry, but I would stay cautious. This ETF focuses on Medical devices and services such as insurance rather than drug companies, which could be a lower risk option going forward.

#8. Fidelity MSCI Real Estate Index ETF

This is one sector that might not care about the election result, but housing is linked to so many other industries. So lets have a look.

  • Type of ETF: Real Estate Industry Stocks
  • Market Value: $1.1 Billion
  • Expense Ratio: 0.08%
  • Dividend Yield: 3.20%

Real Estate is a tricky one, especially with all the current consumer debt in the U.S., also because of the current circumstances relating to the global pandemic, housing could dip if people can’t afford their payments.

Growth of $10,000 in 5 Years:
ETFStart20162017201820192020
Fidelity MSCI Real Estate Index ETF (FREL)$10,000$11,320$11,854$12,231$13,920$12,500
Price: September 30th of Year

This fund hinges on a growing economy. Basically, if you have a growing economy where more money is put in peoples pockets, you will have a better housing market. The contrast is, people with no money will reduce the size of their house before impacting their lifestyle.

A Look into the Future for the Fidelity MSCI Real Estate Index ETF
P/E RatioP/B RatioReturn on EquityEarnings Growth RateRisk
30.392.2924.98%3.23%Medium
October 2020

This ETF is one of the best to expose yourself to REIT income, it is currently the second cheapest on the market, and has proven itself by returning consistent income for investors.

REITs remain an excellent way to diversify a portfolio with an income generating vehicle. REITs must pay out at least 90% of their taxable income to shareholders in the form of dividends, this is why it is such a great income generating ETF.

Unfortunately because of the current economic climate and global health situation, housing is unpredictable. This is best way to get into REIT market without exposing yourself to too much risk. This has been one of the top performing Real Estate ETFs since February 2015.

#9. iShares Core MSCI Emerging Markets ETF

Emerging markets are those that are undeveloped but have high potential growth. They are sometimes international stocks which can be a risk factor.

  • Type of ETF: Emerging Markets/Growth Stocks
  • Market Value: $61.8 Billion
  • Expense Ratio: 0.14%
  • Dividend Yield: 2.60%

Emerging markets can be risky business for investors, especially if they invest internationally. However, the broad investment strategy this ETF employs allows for the portfolio to stretch across 2,500 stocks.

Growth of $10,000 in 5 Years:
ETFStart20162017201820192020
iShares Core MSCI Emerging Markets ETF (IEMG)$10,000$11,577$14,046$13,736$13,562$14,786
Price: September 30th of Year

The high volatility of this ETF shows when looking at prior performance. The ETF gives exposure to broad emerging markets with a goal to find long term growth, unfortunately… This doesn’t always happen. But with high growth in the last 5 years, it looks good.

A Look into the Future for the iShares Core MSCI Emerging Markets ETF
P/E RatioP/B RatioReturn on EquityEarnings Growth RateRisk
15.721.7150.50%28.42%High
October 2020

I’m not going to sugarcoat this… Emerging markets can be highly lucrative, but also massively unpredictable. Also, because the ETF invests in multiple countries, it can become even more risky when factoring in currency conversions and foreign politics.

As many as you will know growth stocks can easily become declining stocks because they are usually young and undeveloped. Also the dividend offered by these companies can also be very volatile.

This ETF is high risk because of the growth emerging markets. This is not an ETF to pick if you want to lower your portfolios overall exposure. I think individual growth stocks are better to focus on that a broad growth portfolio.

#10. iShares J.P. Morgan USD Emerging Markets Bond ETF

The only bond ETF on this list, it might sound boring but this is a high yielding bond ETF full.

  • Type of ETF: Emerging Market Bonds
  • Market Value: $15.5 Billion
  • Expense Ratio: 0.39%
  • Dividend Yield: 4.40%

It might sound dangerous to invest in emerging market nation bonds such as Mexico, Turkey, and Saudi Arabia, especially when bonds have a history of low return. But I think it’s a missed opportunity to diversify your portfolio.

Growth of $10,000 in 5 Years:
ETFStart20162017201820192020
iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB)$10,000$11,073$14,708$11,043$12,643$12,865
Price: October 31st of Year

Bonds a generally quite stable, but we are talking about emerging nations. These bonds are U.S. Dollar Denominated Government bonds issued by emerging market countries, which makes them a higher yielding debt security while also protecting your money in a Government backed debt… Which have never been defaulted on.

A Look into the Future for the iShares J.P. Morgan USD Emerging Markets Bond ETF
P/E RatioP/B RatioReturn on EquityEarnings Growth RateRisk
N/AN/A15.57%5.79%Low/Medium
October 2020

I think even though these are Government bonds we still need to be cautious with the level of risk involved. The higher reward you gain from this bond ETF is coupled with the higher risk of an emerging markets dynamic.

The emerging nations may not have transparent economies such as the U.S., also there is a possibility that they have high levels of corruption in the political system.

Bond ETFs are great for diversification, but I would stick to lower yield lower risk options. Also, another factor to consider with bond funds is that when interest rise, bond value declines. 1%-point increase in interest rates would knock EMB’s value down about 8%.

Are ETF’s Worth it?

I believe ETFs are well worth the investment if you are patient. When you reach an investing level where you are worried about risk, these funds can offer safety when the market is volatile.

The only other option is to look into Mutual funds, which are just a more hands on ETF. But… Are Mutual Funds better than ETFs? Just read our last article to find out.

Chris Race

I am an accountant from the U.K. specialising in Management Accounting, Personal & Business Tax, Financial Analysis, and Wealth Management. My passion for learning is what lead me to creating this blog. Stock market investing has always been a interest of mine, and since I was 18 years old... This interest has become a source of income for me and my family.

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