IYW

3 ETFs to Buy Now: May 2024

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Investors can outperform the market by picking the right ETFs instead of monitoring dozens of stocks. ETFs offer exposure to numerous corporations and often follow a theme. For instance, some ETFs prioritize large-cap companies in the United States, while others allocate their capital toward international small-cap stocks.

Investors can choose from many funds, but it’s important to look at historical returns and current holdings. Looking at these details can help you determine the top ETFs to buy now. These are some of the most promising funds available.

iShares US Technology ETF (IYW)

The iShares US Technology ETF (NYSEARCA:IYW) gives investors exposure to U.S. tech companies. The fund’s top positions are the Magnificent Seven stocks. Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL) and Nvidia (NASDAQ:NVDA) make up more than 45% of the fund’s total assets.

If those three stocks continue to perform well, IYW should have no issue with outperforming the stock market. The fund has done just that over several years. IYW has an annualized return of 20% over the past decade. The iShares US Technology ETF also has a responsible 0.40% expense ratio.

Although most of the fund’s capital is allocated across a few stocks, the fund has more than 100 holdings. It has a heavy focus on tech, with Software & Services representing 40% of total assets. Semiconductors are right behind it with a 30% position in the fund. Tech hardware and media are the other two sectors within the fund. The remaining sectors each have less than 1% of the fund’s total assets. If you like tech stocks, you’ll enjoy IYW.

Schwab US Large-Cap Growth ETF (SCHG)

Large-cap written on a stock ticker. Large-cap stocks.

Source: iQoncept / Shutterstock

The Schwab US Large-Cap Growth ETF (NYSEARCA:SCHG) uses the Dow Jones US Large-Cap Growth Total Stock Market Index as its benchmark. The fund offers exposure to large-cap U.S. equities and diversifies its holdings across 250 stocks.

SCHG has the same top three holdings as IYW but with lower concentrations. Microsoft, Apple and Nvidia make up more than 30% of the fund’s total assets. The fund is up by 15% year-to-date and has an annualized return of 15% over the past five years. Investors will keep most of their gains, as the fund only has a 0.04% expense ratio.

Investors will also receive steady cash flow from SCHG. It has a 30-day SEC yield of 0.37%. Almost half of the fund’s total assets are in the Information Technology sector. The next three sectors are Communication Services, Consumer Discretionary and Health Care. Each of these sectors has around 10% or more of the fund’s total assets.

Invesco S&P 500 Top 50 ETF (XLG)

Illustration of an ETF in multiple sectors.

Source: SWKStock / Shutterstock

The Invesco S&P 500 Top 50 ETF (NYSEARCA:XLG) takes an innovative approach to the S&P 500. Instead of having the top 500 profitable corporations based on market cap, XLG only holds the top 50 stocks within the index.

This methodology gives XLG investors outsized exposure to the Magnificent Seven stocks. It’s a common theme among the top-performing index funds and ETFs. Microsoft, Apple and Nvidia make up more than 30% of the fund’s total assets. More than 40% of the fund’s assets are in the Information Technology Sector. Communication Services, Health Care, Consumer Discretionary and Financial each consist of around 10% or more of the fund’s total assets.

XLG has a 30-day SEC yield of 0.90% and an expense ratio of 0.20%. Distributions are paid out quarterly in March, June, September and December. The fund has performed well and has an annualized return of around 15% over the past five years.

On the date of publication, Marc Guberti did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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