This article was written by Brian Spero, a regular
contributor for the financial resource,
, where he shares his tips for investing and smart money
Exchange-traded funds (ETFs)
have often been ignored when it comes to investing for
retirement, but the latest trends suggest a growing number of
investors are quickly warming to the idea. Previously believed to
be too risky for long-term strategies,
are gaining ground, and some experts suggest they're just as good
managed mutual funds
ETFs have become increasingly attractive for those struggling
to ramp up their retirement savings due to their low fees,
relative simplicity, tax advantages, and dynamic growth
potential. Even big corporations are starting to see their
promise, and some have even transferred assets to exchange-traded
funds for retirement portfolios.
In the coming years, more company-sponsored retirement and
401k plans will likely follow suit. If you're considering adding
ETFs to your retirement portfolio, it's time to speak to your
financial advisor and take a look at these solid picks:
1. iShares Barclays TIPS Bond Fund (
Bonds traditionally bring stability to a stock portfolio, and
ETFs such as the iShares Barclays TIPS Bond Fund provide a more
cost-efficient and simple way to accomplish this than populating
your portfolio with individual bond holdings or a managed bond
This ETF has primary holdings in
treasury inflation-protected securities
, and currently has total net assets of $21.8 billion. It has
returned 6.30% since its inception in December 2003. If
you're looking for an effective way to protect your savings
against inflation, this is a steady pick.
2. Vanguard REIT Index ETF (
A peak performer over the last few years, the Vanguard REIT
Index ETF attempts to mirror the returns of the MSCI US REIT
(real estate investment trust) index. By investing broadly in
real estate investment trusts, this riskier fund serves to
diversify a portfolio that's heavy on stocks and bonds by
offering the potential for income, as well as growth.
Launched in September 2004, this Vanguard ETF has total net
assets of $29.7 billion spread across 118 stocks. It has returned
a solid 8.96% since inception, but has delivered a strong +22.22%
over the last three years. For the investor ready to add more
risk to his or her retirement portfolio, this Vanguard fund is a
top option in real estate investment trusts.
3. Global X Silver Miners ETF (
Precious metals have long been a method to bring
balance to a portfolio during unpredictable economic times,
and an ETF provides affordable, lower-risk entry into this
challenging investment category.
The Global X Silver Miners ETF employs a strategy meant to
correspond to the performance of the Solactive Global Silver
Miners Index, and was a standout fund over the past year, posting
a 14.7% return.
The ETF has a market cap of $321 million, and directs in
excess of 80% of its assets to securities in the silver mining
industry, with top holdings in Silver Wheaton Corp. (SLW),
Industrias Penoles CP (IPOAF), and Fresnillo plc (FRES).
As a long-term strategy, this fund removes the risk of
investing in a single company, is diversified geographically, and
seeks to provide a hedge against inflation with potential
for higher dividends by capitalizing on silver's consistent
attractiveness as an asset and growing prominence for use in
4. Vanguard Russell 1000 ETF (
If you see value in investing in some of the most dynamic
publicly traded companies, the Vanguard Russell 1000 Growth Index
fund is highly rated in its class. A candidate for 401k managers
diversifying with ETFs, this fund focuses on large-cap growth
stocks, featuring allocations in blue chips including Exxon Mobil
(XOM), General Electric (GE), and Microsoft (MSFT).
More than 44% of its investments are centered in technology,
financials, and consumer services. This ETF is a solution for
results-driven investors eager to gain access to the long-term
growth potential of the largest U.S. companies, and willing to
take on the associated risk.
5. iShares Dow Jones Select Dividend Index Fund (
Many tout value in the low-cost, high-dividend yield of the
iShares Dow Jones Select Dividend Index Fund, which has come
alive over the past three years posting a favorable 13.32% market
price returns over the period. Started in November 2003, the fund
focuses on investing in U.S. stocks with the most consistent
positive dividend results, and diversifies its $10.9 billion in
total net assets across 101 holdings.
This ETF is tilted heavily to the utilities sector, which
comprises more than 30% of the fund, and has top holdings in
Lorillard (LO), Lockheed Martin (LMT), and Chevron (CVX). This
fund seeks to provide a steady income stream.
If you're looking for a solution to inject some energy and
innovation into your retirement investment strategy, ETFs may be
the answer. By researching the various types of ETFs available,
identifying those that compliment your portfolio, and picking
stand-out performers from specific categories, you have the
opportunity to accelerate your retirement savings by limiting
Which other ETFs would you suggest?
ISHARS-DJ DVD (DVY): ETF Research Reports
GLBL-X SILVER (SIL): ETF Research Reports
ISHARS-BR TRES (TIP): ETF Research Reports
VIPERS-REIT (VNQ): ETF Research Reports
VANGD-RUS 1000 (VONE): ETF Research Reports
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