Best ETF’s For…

Kiplinger has released their annual “best of” edition, where they rate the best of just about everything. One of the categories is ETF’s. I thought I’d share the picks, and some thoughts on them here, but you should check out the complete issue if you get a chance.

Best ETF for Income.

Kiplinger’s pick for best Income ETF is the iShares iBoxx $ Invest Grade Corp Bond (LQD) ETF. It not only has a decent yield, but a pretty good return so far for the year, especially for a bond ETF – 11.65%.

LQD generally seeks to match the price and yield performance of the iBoxx $ Liquid Investment Grade Index. LQD invests 90% or more of assets in the bonds of the underlying index, with at least 95% in investment grade corporate bonds. The remaining 5% of assets can be in U.S. government obligations, and in cash and cash equivalents. It is a non diversified fund, meaning there is no stock component, only bonds. That’s something to consider if diversification is important in the income portion of your portfolio.

Not only has this fund outpaced most other corporate bond ETF’s, it also pays a monthly dividend.

YTD Return: 11.65%
Yield : 5.38%
Total Expense Ratio 0.15%

Best ETF for Those Seeking a High Return.

Kiplinger’s first of two Vanguard funds recommended in this article is the Vanguard Emerging Markets Stock ETF (VWO). It’s no wonder either, with an expense ratio of only 0.20%, and a total return year to date of a whopping 62.82%!

Vanguard’s Emerging Markets Stock ETF tracks the performance of the MSCI Emerging Markets index. It’s a passively managed fund which invests all or nearly all of its assets in a representative sample of the common stocks included in the MSCI Emerging Markets index.

YTD Return: 62.82%
Yield: 3.11%
Total Expense Ratio 0.2%

Small companies.

The second Vanguard fund recommended is the Vanguard Small Cap ETF (VB).

The VB ETF tracks a benchmark MSCI US Small Cap 1750 index. It invests all or nearly all of its assets in stocks that make up that index. Like all Vanguard ETF’s, the VB has a low expense ratio (0.1%), but a high (for small cap stocks) yield of 1.76% – and it’s had a pretty good run this year.

YTD Return: 30.92%
Yield: 1.76%
Total Expense Ratio 0.1%

Complete portfolio.

The iShares S&P Growth Allocation (AOR) ETF is like a one stop shop for your somewhat generic allocation with moderate risk portfolio. It invests 60-70% in stocks, and 30-40% in fixed income securities like bonds and REITs.

It’s a great out of the box portfolio for the investor who isn’t sure what he should be investing in and what kind of allocation it should be.

YTD Return: 15.70%
Yield: N/A
Total Expense Ratio 0.11%


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