What are the top ETFs everybody should own

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What are the top ETFs everybody should own?

This should be a simple question to answer, but not surprisingly Wall Street has thousands of options to choose from. How do you sift through the rubble and find quality ETFs worthy of your hard earned capital?

“Most investors, both institutional and individual, will find that the best way to own common stock is through an index fund that charges minimal fees.”
Warren Buffett

ETFs should be synonymous with passive or index investing. But not anymore. Day traders and sector rotation traders love using ETFs for short-term strategies. In reality, the proliferation of sector ETFs have left retail investors scratching their heads among the thousands of options available.

In reality, passive or index investing aims to minimize buying and selling (transaction costs) for long-term time horizons while replicating a broad market index. The problem is the “broad market index” requirement has been pushed aside. Nowadays the “index” is too narrow and the benefits of passive investing are compromised, if you don’t know what to look for.

Traits of a superior ETF:

Broad diversification
Ultra-low management fees
Good liquidity

Examples of ETF’s everybody should own:

Vanguard S&P 500 ETF (“VOO”) – 0.03%
Vanguard Total Stock Market ETF (“VTI”) – 0.03%
ishares Core S&P 500 ETF (“IVV”) – 0.03%

Checkout the ETF database for a list of low cost ETFs. Warning: this list does not consider diversification or liquidity.

Ironically the list is super small. But that’s a good thing. To be sure, reducing a list of thousands to three makes the process of choosing an ETF much simpler.

Conclusion

Circling back to the point: what are the ETFs everybody should own?

In the end, the list of ETFs above should point you in the right direction. All the ETFs listed above have broad diversification, low management fees and good liquidity. All the hallmarks of a superior ETF. Remember ETFs were originally designed to be passive or index style investments for the long-term.

Looking for an interesting read on mutual funds, then checkout my post titled, “Are mutual funds dead because of high fees?“

DISCLAIMER: Content provided in this article is for informational and entertainment purposes only. This article is not legal and/or investment advice. This article should not replace professional investment advice based upon your particular situation. Duties are not assumed, intended or created by this communication.