Discover the top ETFs to buy right now and diversify your investment portfolio for long-term growth. The stock market appears to have more room to run in 2024 after a strong 2023. These ETFs are expected to gain.
It may seem unbelievable, but there was a lot of anxiety at the start of 2023 regarding growing interest rates, inflationary pressures, and possible slowdowns in the global and domestic economies. All things considered, though, the S&P 500 added an astounding 24% to its value last year.
January has carried on the encouraging story. Wall Street has been impressed with the financial statistics big businesses have released for the fourth quarter, according to investment research firm FactSet. 69% of S&P 500 companies have reported better-than-expected earnings, and 68% have reported better-than-expected revenue.
As a result, there has been a steady increase, with the overall market up almost 16% over the past three months. This bodes extremely well for the remainder of the year.
The following seven ETFs, if you’re hoping to profit from this bull market, all present intriguing opportunities to capitalise on this possible increase as we surge forward into 2024:
| ETF | ASSETS UNDER MANAGEMENT | EXPENSE RATIO |
| Invesco QQQ Trust (ticker: QQQ) | $244 billion | 0.2% |
| VanEck Semiconductor ETF (SMH) | $14 billion | 0.35% |
| Consumer Discretionary Select Sector SPDR Fund (XLY) | $19 billion | 0.09% |
| Global X Uranium ETF (URA) | $3 billion | 0.69% |
| KraneShares Global Carbon Strategy ETF (KRBN) | $362 million | 0.79% |
| Global X Artificial Intelligence & Technology ETF (AIQ) | $1.1 billion | 0.68% |
| iShares Core S&P 500 ETF (IVV) | $424 billion | 0.03% |
1. Invesco QQQ Trust (QQQ)
Expense ratio: 0.2%, or $20 annually on $10,000 invested
Assets under management: $244 billion
The tech-heavy Nasdaq-100 index, which is benchmarked to the QQQ, surged more than 50% during the same period last year, demonstrating the strength of Big Tech companies like Apple Inc. (AAPL) and Microsoft Corp. (MSFT), even if the S&P 500 had an impressive run. Through the end of January, the index and the S&P 500 had been virtually tied for the first part of the year. However, if you are betting on Silicon Valley’s continued dominance this year, QQQ is a straightforward and diversified ETF to lean into this sector, with about 50% of its assets in tech compared to the S&P 500’s 30% in the information technology sector.
2. VanEck Semiconductor ETF (SMH)
Expense ratio: 0.35%, or $35 annually on $10,000 invested
Assets under management: $14 billion
The chip industry is one area of technology that has recently experienced tremendous growth. With a concentrated list of 25 components lead by industry titans Nvidia Inc. (NVDA) and Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), SMH is the largest and most liquid method to invest with this as your aim.
This business is known to be highly cyclical, but following a dismal 2022 in which SMH fell about twice as much as the S&P 500, things have been going really well lately. In the last 12 months, this ETF has increased by 60%. We might see SMH shift south again if things go south. Major chipmakers, and this ETF as a result, are trading close to all-time highs due to a positive view for 2024.
3. Consumer Discretionary Select Sector SPDR Fund (XLY)
Expense ratio: 0.09%, or $9 annually on $10,000 invested
Assets under management: $19 billion
In relation to cyclical investments, a return to consumer discretionary companies is another strategy that some investors are taking into consideration following a better-than-expected 2023. Things are improving for consumers as inflationary pressures lessen and the job market continues to grow. As evidence, the International Monetary Fund upgraded its 2024 global economic prediction for the United States significantly in January, raising GDP growth projections to 2.1% from 1.5% as recently as October. Discretionary stocks, which comprise XLY and include Amazon.com Inc. (AMZN) and Home Depot Inc. (HD), could see significant gain this year if the Fed decides to scale down rate increases.
4. Global X Uranium ETF (URA)
Expense ratio: 0.69%, or $69 annually on $10,000 invested
Assets under management: $3 billion
As recently as 2019, uranium prices were trading in the low $30s. However, during the past three years, they have soared to a 15-year high and show no indications of stopping. Indeed, according to some Wall Street projections, uranium prices could reach $115 per pound by 2025 and surpass $100 this year. Naturally, URA, a diversified uranium exchange-traded fund (ETF) with holdings in major mining and commodities corporations like Cameco Corp. (CCJ) as well as the physical metal, has profited from this move.
It could be simpler to trade URA instead of SRUUF if you merely want to play the Sprott Physical Uranium Trust (OTC: SRUUF) and would prefer not to pay the 0.72% yearly charges for SRUUF and deal with a listing on the pink sheets rather than a major exchange (unlike URA’s participation on NYSE Arca).
Also read this: The Top 10 Artificial Intelligence Companies in Stocks
5. KraneShares Global Carbon Strategy ETF (KRBN)
Expense ratio: 0.79%, or $79 annually on $10,000 invested
Assets under management: $362 million
In the era of climate change, uranium is a rising commodity as power companies seek to diversify their energy sources and avoid using fossil fuels. Another variation on the long-term decarbonisation trend is this carbon ETF offered by boutique investment manager KraneShares. As a directional wager on the price of pollution, KRBN is essentially benchmarked to an index of “cap-and-trade” carbon allowances. The fund has shown volatility in the past, rising from less than $20 at the end of 2020 to over $50 in the beginning of 2022 before plunging down to its current price of about $30 per share.
However, this unusual fund is worth looking into if you want to bet on the expansion of carbon markets—and given that Morgan Stanley estimates the voluntary carbon offset market will reach $250 billion by 2050, you probably should.
6. Global X Artificial Intelligence & Technology ETF (AIQ)
Expense ratio: 0.68%, or $68 annually on $10,000 invested
Assets under management: $1.1 billion
Artificial intelligence has been a megatrend that has been on the minds of many investors over the past few months. Everyone wants to get in on the explosive potential of this new technology, from the rise of ChatGPT—the app that broke the record for the fastest count of 100 million monthly users—to the frenzy surrounding generative AI and financial applications.
Fortunately, AIQ removes some of the uncertainty from the equation with a diversified fund that owns approximately 90 tech stocks, such as Meta Platforms Inc. (META), the parent company of Facebook, Salesforce Inc. (CRM), and numerous other businesses vying to create the AI-powered economy of the future. Thanks to this optimism, the fund has increased by almost 35% over the past year, and AIQ is rising sharply as we head towards 2024.
Read this RenQ Finance: Decentralized Finance’s Next Frontier 2024
7. iShares Core S&P 500 ETF (IVV)
Expense ratio: 0.03%, or $3 annually on $10,000 invested
Assets under management: $424 billion
Although all these funds provide targeted investment opportunities, keep in mind that you may always do rather well by using a “plain vanilla,” inexpensive index fund to ride the long-term boom. With a fee structure that is smaller than that of other ETFs and a correlation to the S&P 500 index of significant U.S. corporations, IVV is one of the largest and most affordable ETFs globally. For those who are not familiar, this index follows 500 of the top domestic equities, which include well-known brands like Apple and Microsoft. One of the previous funds might have a short-term trend that beats the S&P 500.
However, if you’re looking for an ETF to buy right now, you could do worse than IVV given that this large index fund gained 26% last year without any fanfare or flash to support its approach.
Things to Consider before buying ETFs
Investment goals: Whether you’re investing in ETFs for short-term gains or long-term growth, decide what your timeframe and goals are.
Risk tolerance: Evaluate your level of risk tolerance and use it to choose the right ETFs for your investing plan, taking volatility and market swings into account.
Expense ratios: To reduce expenses and optimise profits over time, compare the expense ratios of several ETFs.
Tracking error: Determine how well the ETF follows the underlying asset or index; a high tracking error might cause disparities in performance.
Liquidity: Take into account the ETF’s liquidity, as more trading volume usually leads to reduced transaction costs and tighter bid-ask spreads.
Tax implications: Recognise potential tax ramifications from investing in exchange-traded funds (ETFs), such as capital gains distributions, and take tax-efficient strategies into account.
Diversification: To reduce risk, make sure you have enough diversification by spreading your investments among a variety of ETFs from various asset classes, industries, and geographical areas.
What are ETFs?
Exchange-traded funds, often known as ETFs, are investment vehicles that are traded on stock exchanges and generally consist of stocks, bonds, or commodities.
How do ETFs work?
ETFs, which mirror an underlying index or asset, give investors the flexibility to purchase and sell shares at any time during the trading day, thereby offering liquidity and diversification.
What are the benefits of investing in ETFs?
ETFs are appealing choices for investors looking to balance their portfolios since they provide transparency in holdings, flexibility in trading, cheaper costs as compared to mutual funds, and diversification.
