Yahoo Finance 7 of the Best ETFs to Own in 2017
Looking for performance in 2017.
While 2016 brought its share of surprises -- an early-year market retch, the Brexit and Donald Trump's election stunner -- Wall Street did what Wall Street does best: It made money. The Standard & Poor's 500 index was pacing a roughly 8 percent return with a month left in the year, and several areas of the market were doing far better. As we head into 2017, investors are once again faced with the question of where to find performance. And while it does pay to target a few individual stocks, you can do well even by targeting broad investing themes via the diversification and relative safety of the market's best exchange-traded funds.
Vanguard S&P 500 ETF (ticker: VOO)
It's almost a moral obligation to suggest investors have some of their portfolio dedicated to "the market." That's because humans have an awful time beating "the market." So if you can match the return of "the market" -- namely, the S&P 500 -- for a negligible cost, why wouldn't you? The VOO allows you to do just that, giving you access to Apple (AAPL), Exxon Mobil Corp. (XOM) and a host of other American blue chips. It's a growth play that also yields a decent 2 percent in dividends, and it can be had for a song.
Expenses: 0.05 percent or $5 annually for every $10,000 invested.
iShares Nasdaq Biotechnology ETF (IBB)
The past year and a half has been a sobering period for biotech stocks as the industry came to terms with possible margin-cramping regulation. The impetus was a single tweet in late 2015 from Hillary Clinton, then the seeming favorite to win the White House, promising to crack down on price gouging. But the election of Trump has put such reform in question, granting a reprieve of sorts to biotech stocks. That's great news for the IBB, which is a collection of Wall Street's top biotechs, including Celgene Corp. (CELG), Biogen (BIIB) and Gilead Sciences (GILD).
Expenses: 0.47 percent
SPDR S&P Regional Banking ETF (KRE)
Another popular Trump play shortly after his election was banking stocks. The logic: The Trump administration will tear down several bank regulations, including Dodd-Frank. That last bit might be a touch ambitious, but Trump should have success in knocking down a few barriers to bank profitability. Meanwhile, a Federal Reserve rate hike or two seems increasingly likely, and that in turn will bolster banks' net interest margins. All this conspires to help the components of the SPDR S&P Regional Banking ETF -- a fund focused on regional bank stocks including KeyCorp (KEY), Regions Financial Corp. (RF) and Citizens Financial Group (CFG).
Expenses: 0.35 percent
VanEck Vectors Semiconductor ETF (SMH)
While many investors choose to chase the many faces of tech hardware, be it hardware firms like Apple or service providers like Facebook (FB) and Alphabet (GOOG, GOOGL), much of the money in tech is to be made in the background. Semiconductor stocks are a prime play in tech because they're at the base of everything, powering smartphones and drones, servers and databases. SMH is a focused basket of 26 semiconductor stocks including Intel Corp. (INTC) and Taiwan Semiconductor Manufacturing Co. (TSM) that has outperformed the market over most significant time periods.
Expenses: 0.35 percent (includes 6-basis-point fee waiver)
Global X Robotics & Artificial Intelligence Thematic ETF (BOTZ)
The BOTZ ETF is a likely winner not just for 2017, but several years into the future. That's because it's a play on a pair of growing tech trends that have plenty of gas in the tank -- roboticization and artificial intelligence. This not only includes sexy technologies such as autonomous cars, but also boring (but lucrative!) advances in industrial robotics. That leads to holdings such as Mitsubishi Electric, which produces robots for the manufacturing industry, or SMC Corp., whose pneumatic control engineering solutions power industrial automation.
Expenses: 0.68 percent
iShares U.S. Preferred Stock ETF (PFF)
For the uninitiated, preferred stocks are often considered to be a stock-bond "hybrid," as they offer a few characteristics of each. Preferred stock does represent ownership in a company, just like common stock, but it doesn't include voting rights, just like bonds. Also like bonds, preferreds offer a fixed (and high!) regular payout. The PFF is the market's most popular way to harness the power of preferreds, providing exposure to nearly 300 preferred shares with a heavy tilt toward financials such as Wells Fargo & Co. (WFC) and HSBC Holdings (HSBC). It's also a significant source of yield, at well more than 5 percent.
Expenses: 0.47 percent
SPDR Bloomberg Barclays High Yield Bond ETF (JNK)
Another way to collect big income is via high-yield bonds -- typically referred to as "junk." This term is used to describe less-than-stellar credit ratings in the issuing companies, requiring higher payouts to compensate for the enhanced risk of holding their debt. The JNK helps mitigate some of that risk by holding more than 800 different junk bonds, with nearly 90 percent of those coming from industrial companies. Currently, top holdings include debt from SFR Group, Sprint Corp. (S) and Western Digital Corp. (WDC), and the yield stands at more than 6 percent.
Expenses: 0.4 percent
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