10 Best ETFs Of January 2024 (2024)

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The Vanguard Total International Stock ETF has a powerful factor in its favor. Currently, key foreign stock markets are more attractively valued than that of the U.S., based on comparisons to the widely followed S&P 500 Index. Based on the reversion to the mean principal, international stocks are due for a rebound.

With nearly 8,000 holdings, VXUS provides expansive exposure to international stocks. Still, bear in mind that many component stocks do business in the U.S., including Taiwan Semiconductor Manufacturing (TSM) and Nestle (NSRGY).

About three-quarters of VXUS is at work in stocks based in developed markets. Roughly 70% of holdings are large-cap stocks. The balance consists of mid- and small-cap stocks.

VXUS holdings reflect the wisdom of the investment world, due to the fund’s market-capitalization weighting approach. This is truly a set-it-and-forget-it international-stock fund, designed as core portfolio holding.

Investors seeking strong dividends, high-quality stocks and capital appreciation will find a lot to love in the Schwab U.S. Dividend Equity ETF. The low expense ratio is alluring. SCHD aims for a portfolio populated by companies with stronger fundamental metrics than their peers.

SCHD’s roughly 100 holdings skew toward large-cap value stocks. Many are reliable dividend payers. Unlike the tech-heavy S&P 500, industrials, health care, financials and consumer staples make up the bulk of SCHD holdings.

SCHD outperformed its Morningstar large-cap value fund category during the previous five- and 10-year periods. Investors seeking a passive index fund that’s relatively generous with dividends and which often outpaces its peers should check out SCHD.

The Invesco S&P 500 GARP ETF owns stocks primed for growth at a reasonable price. The fund’s roughly 70 holdings are chosen from among companies in the S&P 500 with the highest growth scores, along with what Invesco calls high quality and strong value composite scores.

Well diversified, SPGP’s top 10 holdings comprise roughly 20% of the fund. Healthcare is SPGP’s largest sector. Technology is close behind, followed by financials and industrials.

SPGP has larger weightings of mid- and small-cap stocks than the S&P 500 does. That’s likely a key reason that SPGP is more volatile than the large-cap bogey. Still, if you want a cautious fund that has handily outperformed its Morningstar category over the past three, five and 10 years, kick the tires on SPGP.

International stocks should be a part of any diversified investment portfolio. Schwab Fundamental International Large Company Index ETF focuses on large- and mid-sized companies from developed markets.

This passively managed fund offers a dividend yield that’s higher than the market average, represented by the S&P 500 Index. FNDF leans towards large-cap value and core stocks. The fund has outperformed its Morningstar category over the past one, three, five and 10 years.

Growth funds own companies that are delivering higher-than-average growth rates in key metrics like sales and cash flow. The Vanguard Mid Cap Growth ETF posts a five-year earnings growth rate around 29%. That’s about four percentage points higher than VOT’s Morningstar mid-cap growth category’s average.

VOT’s top sector weightings are in technology, healthcare stocks and industrials. The fund has outperformed its Morningstar category over the past one, three, five and 10 years. VOT provides low-cost access to faster growing mid-cap companies, which should be appealing to aggressive growth investors.

More and more, the Vanguard Intermediate-Term Corporate Bond ETF looks like a natural fit for any diversified portfolio. After all, diversification calls for owning both stocks and bonds in any long-term portfolio. Bonds add stability and are typically less volatile than stock investments. And, increasingly, they’re also a decent source of yield.

VCIT owns roughly 2,100 corporate bonds with investment-grade credit ratings. Its bonds mature in five to 10 years. The fund’s average effective duration is about six years. Duration shows the expected price decline of a bond or bond fund for each 1% rise in interest rates. In VCIT’s case, shareholders can expect the security to fall in value by about 6% for each 1% annual rise in interest rates.

Ninety-five percent of the bonds land in the A and BBB rating categories, which are investment grade. Over the next several years, it’s likely that interest rates will plateau or decline, lifting bond prices.

The iShares Floating Rate Bond ETF is a floating rate fixed income fund. It holds more than 300 shorter-term investment-grade bonds with maturities between one and five years.

FLOT’s average effective duration is barely a week. The shorter term and floating rate help the fund maintain a relatively steady value. The monthly income is handy for investors seeking to profit from current higher yields and regular cash flow payments.

Bonds owned by FLOT sport solid credit ratings. with the majority holding an A, AA or AAA. Roughly one-fifth of FLOT holdings are government bonds. About another 75% are corporate bonds. Investors seeking higher yields than what they can get from a savings account and who need near-term cash access should consider FLOT as an alternative to certificates of deposit.

The iShares family is known for low-fee, well-crafted ETFs. The iShares National Muni Bond ETF is no exception. MUB grants wealthier investors a muni bond fund with federally tax-exempt income for a low cost.

This national muni-bond fund owns well over 5,000 investment grade municipal bonds from around the U.S. MUB’s tax-free yield is equivalent to taxable yield of 3.461% for a married joint filing couple in the 24% bracket. It has an effective duration of about six years.

Roughly 20% of MUB’s bonds are from New York. Another 20% are from California. That suggests that residents of those states might also receive a modest tax break on their state tax payments as well. If you’re looking for federally tax exempt monthly cash flow, then MUB serves it up on the cheap.

Nobel prize winner Eugene Fama and his collaborator Kenneth French’s research found that small-cap and value stocksoutperform the market over long periods of time. The trouble is, large caps and growth stocks also outperform for extended periods.

If you think the market is tilting in favor of small caps and value stocks, Avantis U.S. Small Cap Value ETF may be for you. It focuses on U.S. small caps with high profitability ratios and low valuations. AVUV owns more than 700 stocks. AVUV holdings have a higher profits-per-book-value than its benchmark, the Russell 2000 Value Index.

The well-diversified fund puts less than 10% of its shareholders’ money to work in its top-10 holdings. AVUV’s largest sector weightings are in financials, consumer cyclicals, industrials and energy. Those four sectors account for roughly 80% of fund assets. That concentration adds risk to the portfolio. Yet AVUV’s 3 year average annual performance is roughly half again bigger than its Morningstar small-cap value category’s.

Columbia Threadneedle screens for U.S. companies at the forefront of their respective industries in environmental, social and governance factors, and which appear poised for strong long-term growth. The fund seeks out firms from the ESG universe with financial stability, consistent cash flow and the potential for continuing dividend payments.

ESGS is discerning—it owns only about 100 stocks. The holdings are mainly large caps, and the portfolio leans toward value and blend stocks. Concentrated, the top-10 stocks are roughly 40% of ESGS assets.

A relatively high dividend yield makes ESGS a solid choice for ESG inventors seeking both cash flow and price appreciation. Be aware that ESGS also has a high turnover rate, well over 100% annually.