The 16 Best ETFs to Buy for the Rest of 2026

Don’t think of the best ETFs for the rest of 2026 as an attack plan—think of it as a market preparedness kit.

Exchange-traded funds have become a clear favorite of the “smart money.” According to a recent survey from financial services data and analytics firm ISS Market Intelligence, when asked about how they would invest client assets if a favored manager was available across all types of vehicles, 60% said they preferred ETFs over open-ended mutual funds and separately managed accounts—a huge jump from 49% just a few years ago!

Why? Well, I can think of a host of reasons, but perhaps the two most important are their extraordinary versatility and relatively low fees. Not only can you use ETFs to execute hundreds of strategies across numerous asset classes, but their cost is virtually always lower than any comparable alternatives.

That versatility makes them useful in a wide range of scenarios. Sure, you can put them to work in trends you expect to dominate headlines across the remainder of the year. But as we’ve been reminded so far in 2026, surprises happen! The market doesn’t always move according to plan, so you might also need ETFs that help you roll with those punches. And all the while, you have to keep an eye on the very long term—and ETFs can help you there, too.

Today, I want to introduce you to the best ETFs to buy for the rest of 2026.

And here’s your annual reminder: This isn’t a list of ETFs everyone should go out and buy tomorrow. Instead, it’s a list of tools that you might either want to stick in your toolbelt right now, or keep in mind for later when you actually need them. Which ones you select will hinge both on your personal investing wants and needs, as well as the factors that ultimately determine the market’s path for the rest of the year.

Editor’s Note: The tabular data presented in this article is up-to-date as of July 21, 2026.

Disclaimer: This article does not constitute individualized investment advice. Individual securities, funds, and/or other investments appear for your consideration and not as personalized investment recommendations. Act at your own discretion.

The Best ETFs for the Rest of 2026

---

Every year, as we get into June and July, Wall Street’s prognosticators review their original market outlooks for the year and provide updated thoughts about what might happen over the remaining months. Naturally, without fail, a couple funny things always seem to happen:

• Some wild event occurs that throws a lot of those predictions for a loop. COVID. Russia going to war with Ukraine. Rapidly shifting tariff policies. The U.S. goes to war with Iran.
• Those prognosticators end up being correct in a lot of ways, regardless. Broad S&P 500 price targets aren’t exactly reliable. But you would be amazed how often the “pros” are fairly accurate as it pertains to corporate earnings and emerging themes. In many cases, outside events don’t derail these predictions—they just throw off the timing.

Those factors alone make trying to deliver a “best anything” list difficult—ETFs, stocks, fashion choices, whatever. Then, once you also stop to consider that every single reader has their own long-term investing goals, risk tolerances, and time horizons … you start to realize that no best-of list can juggle every one of those variables perfectly. So, my thinking is …

Instead, I go a different route. Rather than exclusively highlight funds that should take off based on market predictions, my annual list gravitates around three types of ETFs:

• Core ETFs: I always like to start with a few core ETFs that, if you don’t already own them, you can buy at pretty much any time and hold on to it—not just for the rest of 2026, but a lot longer than that.
• Defensive ETFs: These are protective ETFs you might not necessarily buy at the beginning of the year, but that you should be aware of in case you need to play portfolio defense.
• Tactical ETFs: I can’t throw in the towel completely. People want to see what the pros think will take off each year, so I list the ETFs that deal with experts’ predictions about what will be successful in the year ahead (or longer). And I keep up on these to see how they’ve played out throughout the year.

So, without further ado, I’ll start this list of the year’s best ETFs to buy with the tactical plays, then move on to the core and defensive funds.

1. Vanguard Mega Cap ETF

---

• Type: Tactical
• Style: U.S. mega-cap stocks
• Assets under management: $10.0 billion*
• Dividend yield: 0.9%
• Expense ratio: 0.05%, or 50¢ per year on every $1,000 invested

What is MGC?

The Vanguard Mega-Cap ETF (MGC) is an index fund that provides access to the largest U.S. stocks—companies that represent roughly the top 70% of American equity markets’ capitalization.

What does MGC hold?

This Vanguard index fund is benchmarked to the CRSP US Mega Cap Index, a benchmark of so-called “mega-cap” stocks.

It’s best to think about Vanguard Mega Cap ETF in contrast to an S&P 500 index fund. While an S&P 500 fund owns the equities of 500 of America’s largest companies, MGC holds just 175—but virtually all of those companies are also the S&P 500’s largest holdings.

Both funds are market cap-weighted, which means the larger the stock, the greater percentage of assets the fund will invest in that stock. Because MGC spreads that money across fewer stocks, its holdings are more concentrated. For instance, Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT) are the top three holdings for both MGC and the S&P 500; while they account for 18% of the S&P 500, they represent 22% of MGC’s assets.

Why should you consider MGC?

The first half of the year belonged to small-cap companies, but that window might be closing.

“We see less upside for U.S. small-cap equities [than large and mid-caps] through year-end 2026 and maintain our unfavorable rating,” says the Wells Fargo Investment Institute. “Even assuming modest economic growth, the combination of higher interest rates, higher labor-cost sensitivity, and limited pricing power may constrain earnings visibility for smaller firms.”

Related: How to Invest for (And in) Retirement: Strategies + Investment Options

Researchers at outfits such as JPMorgan Chase and Carson Group instead like large caps to finish out the year, in part because they include numerous artificial intelligence (AI) leaders that have been driving earnings and margins higher.

MGC provides more targeted exposure to large caps than a traditional S&P 500 fund; for instance, right now, it’s 95% weighted in large companies versus about 80% for the S&P 500. Vanguard’s mega-cap fund is also more concentrated in technology, at about 43% of assets.

Should large caps keep rolling, MGC should be one of the best ETFs to buy for the rest of this year.

* Vanguard fund assets are spread across multiple share classes, including mutual funds and ETFs alike. Assets listed for each Vanguard ETF in this story are for the ETF share class only.

Want to learn more about MGC? Check out the Vanguard provider site.

Make sure you sign up for The Weekend Tea, Young and the Invested’s free weekly newsletter that over 10k monthly readers use to level up their money know-how.

2. State Street Materials Select Sector SPDR ETF

---

• Type: Tactical
• Style: Sector (Materials)
• Assets under management: $8.3 billion
• Dividend yield: 1.7%
• Expense ratio: 0.08%, or 80¢ per year on every $1,000 invested

What is XLB?

The State Street Materials Select Sector SPDR ETF (XLB) is an index fund that invests in materials-sector stocks within the S&P 500.

What does XLB hold?

The XLB ETF holds all material-sector stocks in the S&P 500, which includes companies involved in industries such as chemicals, metals and mining, paper and forest products, containers and packaging, and construction materials. Right now, that’s a roughly 26-stock set of names including Linde (LIN), Newmont (NEM), and Corteva (CTVA).

XLB is also market cap-weighted, and because the ETF’s portfolio is so tight, numerous stocks have significant weights of 4% or above. But the most noteworthy holding is Linde, which currently accounts for 14% of the ETF’s assets. And unlike sectors such as utility that move in lockstep, materials companies—while generally cyclical—involve numerous disparate industries. So the heavy bet on Linde right now is effectively a heavy bet on industrial gases.

Why should you consider XLB?

Materials stocks are one of the premier ways to invest in the growth of the U.S. and global economies. Greater financial strength lends itself to spikes in manufacturing, construction, and infrastructure, which means more demand for lumber, steel, cement, and other materials. Moreover, raw material prices and commodity values tend to appreciate alongside inflation, which can make the sector a decent hedge against rising prices.

Related: The 13 Best Mutual Funds You Can Buy Right Now

“We maintain a positive view on the Materials sector supported by resilient structural demand for key industrial metals, rising US manufacturing activity, and strong earnings momentum in key underlying industries,” State Street Investment Management said in its 2026 midyear report.

For instance, investments in AI-related power demand, grid infrastructure, and electrification are helping the outlook for metals like copper and lithium. And rising U.S. manufacturing activity could boost demand for industrial chemicals.

Yes, XLB is perhaps one of the most boring, staid funds on the market. But for investors unsure which direction the market’s winds will blow, it could be one of the best ETFs to buy for the rest of 2026.

Want to learn more about XLB? Check out the State Street Investment Management provider site.

Make Young and the Invested your preferred news source on Google

Simply go to your preferences page and select the ✓ box for Young and the Invested. Once you’ve made this update, you’ll see Young and the Invested show up more often in Google’s “Top Stories” feed, as well as in a dedicated “From Your Sources” section on Google’s search results page.

3. State Street Financial Select Sector SPDR ETF

---

• Type: Tactical
• Style: Sector (Financials)
• Assets under management: $55.6 billion
• Dividend yield: 1.5%
• Expense ratio: 0.08%, or 80¢ per year on every $1,000 invested

What is XLF?

The State Street Financial Select Sector SPDR ETF (XLF) is an index fund that provides exposure to large financial-sector companies.

What does XLF hold?

State Street’s fund owns the roughly 75 companies in the S&P 500 that fall within the financial sector. This group of large banks, insurers, brokers, and other firms is led by names such as mega-bank JPMorgan Chase (JPM), credit card processors Visa (V) and Mastercard (MA), and insurer/holding company Berkshire Hathaway (BRK.B).

This fund is market cap-weighted, which at the moment creates some significant concentrations in a handful of stocks. Berkshire and JPMorgan each account for 11% of assets, while Visa is another 7%.

Why should you consider XLF?

“Trump 2.0” policies were expected to be a boon for financials in 2025, and while the sector did well, a host of other issues tamped down hopes of a truly blowout bank party. Many pros still expected the beast to be unleashed in 2026 for many of the same reasons, and that still hasn’t really come to pass, with the sector up only marginally for the year. The Fed has maintained low rates, mortgage rates weakened before shooting higher again, and hopes for deregulation still haven’t quite panned out as expected.

Still, the pros remain convinced the financial sector can break out this year.

“The macro backdrop is incrementally more constructive for Financials,” State Street Investment Management says. “While the path for rate policy remains uncertain, economic activity and corporate profits have held up, supporting business credit performance and loan growth—largely reducing fears of a near-term downturn.” State Street also points to financials’ valuation, with the sector continuing to trade “at a meaningful discount to the broader market, with relative multiples near multiyear lows.”

Want to learn more about XLF? Check out the State Street Investment Management provider site.

Related: How to Choose a Financial Advisor

4. Global X Robotics & Artificial Intelligence ETF

---

• Type: Tactical
• Style: Thematic (Artificial intelligence)
• Assets under management: $3.2 billion
• Dividend yield: 0.5%
• Expense ratio: 0.68%, or $6.80 per year on every $1,000 invested

What is BOTZ?

The Global X Robotics & Artificial Intelligence ETF (BOTZ) invests in companies that could benefit—in one of several ways—from advances in robotics and AI technologies.

What does BOTZ hold?

Global X sees robotics and AI having a “wide-reaching application, extending far beyond industrial activity.” BOTZ invests with that in mind, building a somewhat tight portfolio of 61 companies across the globe, and across multiple sectors and industries.

As you might expect, information technology is a significant portion of the fund—but even at a third of assets, it’s still not tops, and it’s less than many other AI ETFs. Instead, industrials lead here, at almost 50% of the portfolio. Healthcare makes up another 8%, with the rest sprinkled across utilities, materials, and consumer discretionary names.

Why should you consider BOTZ?

I said in 2025 that “as far as artificial intelligence is concerned, the cat is absolutely out of the bag. Chip and software stocks still have growth potential, to be sure, but the whole world knows, and many of these firms are priced for protection.”

That hasn’t changed a bit since then—making it all the more important to be discerning about AI opportunities.

“AI infrastructure demand is outpacing supply, and capital expenditure across hyperscalers is expected to reach $837 billion for 2026,” Janus Henderson Investors says in its 2026 midyear outlook. “Meanwhile, U.S. productivity rose 2.9% year over year in Q1, the strongest increase in two years, suggesting AI adoption is showing in the data.

“These trends point to compelling growth prospects in companies supporting the AI buildout and those integrating AI into core operations.”

Global X’s BOTZ provides wider-ranging AI exposure (which goes past the tech sector) and could end up being one of the best ETFs for the rest of 2026 if the risk-on AI trade continues.

Want to learn more about BOTZ? Check out the Global X provider site.

Related: 12 Best Vanguard ETFs You Can Buy [Build a Low-Cost Portfolio]

5. Invesco Pharmaceuticals ETF

---

• Type: Tactical
• Style: Industry (Pharmaceuticals)
• Assets under management: $429.1 million
• Dividend yield: 0.9%
• Expense ratio: 0.57%, or $5.70 per year on every $1,000 invested

What is PJP?

The Invesco Pharmaceuticals ETF (PJP) is an industry ETF that provides exposure to pharmaceutical companies within the healthcare sector.

What does PJP hold?

The PJP tracks the Dynamic Pharmaceutical Intellidex Index (Index), which evaluates pharmaceutical companies based on a variety of criteria, including price and earnings momentum, quality, management action, and value. 

This is a tight portfolio of just 28 pharma firms, but it does span the market-cap gamut, resulting in a much lower average holding market cap of about $31 billion versus the category average ($72 billion). Investors enjoy access to true “Big Pharma” names like AbbVie (ABBV) and Johnson & Johnson (JNJ), but also smaller up-and-comers such as Collegium Pharmaceuticals (COLL) and Tarsus Pharmaceuticals (TARS).

Why should you consider PJP?

Healthcare underperformed the market by a few points in 2025, but pharmaceuticals took off. And Aniket Ullal, SVP and Head, ETF Research & Analytics, CFRA, saw a similarly bifurcated sector in 2026.

“We expect a bounceback in the pharma / biotech sector (other sectors in healthcare like managed care will continue to be under pressure),” he told us in late 2025. “CFRA currently has Buy or Strong Buy ratings on many holdings like Eli Lilly, Amgen, and Merck.” UBS analysts agreed: “Pharma & Biotech stands out for strong momentum, as AI accelerates drug discovery and clinical trial efficiency,” they wrote.

I said at the start of the year that “rather than own the whole sector, then, the best ETF for 2026 could end up being a more industry-specific play such as PJP.” So far, so good.

The broader healthcare sector has struggled in 2026, significantly underperforming the S&P 500 as I write this. Medicare Advantage rate-increase proposals slammed insurers specifically, while investors have broadly eschewed defensive sectors to chase growthier parts of the market. However, the pharmaceuticals story is alive and well, outrunning the market through late July. There’s no reason to move away from this call across the rest of the year.

Want to learn more about PJP? Check out the Invesco provider site.

Related: 15 Best Long-Term Stocks to Buy and Hold Forever

6. WisdomTree Japan Hedged Equity Fund

---

• Type: Tactical
• Style: Single-country (Japan)
• Assets under management: $7.0 billion
• Dividend yield: 1.0%
• Expense ratio: 0.48%, or $4.80 per year on every $1,000 invested

What is DXJ?

The WisdomTree Japan Hedged Equity Fund (DXJ) is an index fund that provides single-country exposure to Japanese equities.

What does DXJ hold?

WisdomTree’s Japan ETF tracks the WisdomTree Japan Hedged Equity Index, which provides exposure to large-, mid- and small-cap dividend stocks from Japan. However, it also neutralizes exposure to fluctuations in the Japanese yen relative to the U.S. dollar by holding forward currency contracts, as well as excluding companies that derive 80% or more of their revenue from Japan. Basically, the index is designed to have greater returns than similar non-hedged products when the yen is weak, and worse returns when the yen is strong.

DXJ currently owns about 430 stocks, with heavy weights in industrials (25%), financials (21%), consumer discretionaries (16%), and technology companies (14%). Top holdings are a who’s who of Japanese blue chips, including Mitsubishi UFJ Financial (MUFG), Toyota Motor (TM), and Sumitomo Mitsui Financial Group.

Why should you consider DXJ?

“Japanese equities enter 2026 with supportive political, economic, and policy conditions, underpinned by the new Takaichi administration and strengthened U.S.-Japan ties,” Amova Asset Management’s Japan equity team said heading into the new year.

The country’s stocks have done well so far in 2026, and Amova still likes the group for the rest of the year.

“Japan remains our preferred equity market,” Amova Asset Management says in its second-half outlook. “The Committee sees Japanese equities remaining structurally supported not only by robust earnings but also by improving governance and the emergence of positive real wages. Another equity-supportive factor is the potential for domestic reflation broadening and in turn supporting financial institutions and other sectors as they benefit from the ongoing resilience and reflationary tendencies of the domestic economy.”

Want to learn more about DXJ? Check out the WisdomTree provider site.

Related: 10 Best Monthly Dividend Stocks for Frequent, Regular Income

7. iShares Core MSCI Emerging Markets ETF

---

• Type: Tactical
• Style: Emerging-market stock
• Assets under management: $149.0 billion
• Dividend yield: 2.2%
• Expense ratio: 0.09%, or 90¢ per year on every $1,000 invested

What is IEMG?

The iShares Core MSCI Emerging Markets ETF (IEMG) is a dirt-cheap index fund that invests in stocks located in emerging-market countries.

What does IEMG hold?

International stocks tend to be divided into two camps:

• Developed markets: More established economies with well-regulated capital markets and stable politics; typically slower-growing. (See: Japan above.)
• Emerging markets: Faster-growing but less established economies that may have more volatile capital markets and more tumultuous political climates.

This Vanguard ETF focuses on the latter; it tracks the MSCI Emerging Markets Investable Market Index, which owns large-, mid-, and small-cap stocks across emerging-market countries.

Related: The 10 Best Fidelity ETFs You Can Buy [Invest Tactically]

The portfolio currently boasts more than 2,800 companies across a couple dozen countries, though it’s more heavily concentrated in Taiwan (26%), China (20%), South Korea (19%), and India (13%). And while IEMG holds stocks of all sizes, it’s market cap-weighted, which means the highest allocations go to mega-cap companies including Taiwan Semiconductor (TSM), South Korea’s Samsung, and China’s Tencent (TCEHY).

Why should you consider IEMG?

Emerging markets (EMs) are well-known among investors for being a source of high growth, and several analysts were bullish on EMs’ prospects for the new year. Many still are.

“In our 2026 outlook, we expected emerging market (EM) assets to continue outperforming,” Invesco says. “That was predicated on our belief that the global economy would accelerate, that Fed easing would weaken the U.S. dollar, and our view that EM assets have relatively attractive valuations. The closure of the Strait of Hormuz has complicated matters. The surge in energy prices is to the benefit of energy-exporting EM countries but could be a problem for energy importers, especially many countries in Asia. Further, the Fed, along with other central banks, has put easing on hold and the dollar has strengthened a little. This, along with concerns around global growth, could well have derailed the performance of EM assets. However, any disruption to EM assets appears to have been short-lived. 

“We also expect the Fed to recommence its rate cuts during the second half of the year, which we think will cause the dollar to weaken further (a factor that has tended to support EM asset performance). In general, emerging markets have been more resilient than feared. In our view, their fiscal positions are often better than some developed markets, their central banks have greater scope to cut rates, and inflationary pressures are less acute.”

IEMG in specific is one of the least expensive ways to get emerging-market exposure, at just 9 basis points annually. In fact, it was created back in 2012 as a less-expensive version of its sister fund, the iShares MSCI Emerging Markets ETF (EEM), once the predominant EM fund but much more expensive at 0.72% in annual fees. Today, IEMG boasts more than five times the assets held in EEM.

While IEMG is categorized as a “tactical” fund, CFRA’s Ullal makes the case for it as a “core” fund, too. “Many U.S. investors tend to have a U.S. home bias, particularly due to the artificial intelligence trade,” he says. “However, emerging markets can provide diversification benefits and access to international growth.”

Want to learn more about IEMG? Check out the iShares provider site.

Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, Young and the Invested’s free retirement planning newsletter.

8. Vanguard FTSE Europe ETF

---

• Type: Tactical
• Style: International region (Europe)
• Assets under management: $30.0 billion
• Dividend yield: 2.9%
• Expense ratio: 0.06%, or 60¢ annually on a $1,000 investment

What is VGK?

The Vanguard FTSE Europe ETF (VGK) is an index fund that owns the stocks of predominantly developed-market European companies.

What does VGK hold?

VGK, which tracks the FTSE Developed Europe All Cap Index, owns 1,230 European stocks of all sizes. The fund is overwhelmingly loaded up with large caps such as Dutch multinational chipmaker ASML Holding (ASML), British bank HSBC Holding (HSBC), and Swiss consumer giant Nestlé (NSRGY), though it does provide about 15% exposure to the region’s mid-caps and a little exposure to smaller companies from the continent.

The portfolio is unsurprisingly tilted toward the region’s biggest and most stable economies. U.K. firms currently make up 23% of assets, followed by Switzerland (14%), France (14%), and Germany (13%). And like many international funds, VGK is heavy in financials (24%) and industrials (20%).

Also typical of blue-chip international funds, Vanguard FTSE Europe ETF pays much more in dividend income than comparable U.S. funds. VGK’s nearly 3.0% yield is roughly thrice what the S&P 500 is paying right now.

Why should you consider VGK?

Europe hasn’t been the flashiest point on the globe in 2026, only managing to crawl to a single-digit gain so far in 2026. Still, JPMorgan analysts see more upside from the continent throughout the rest of the year:

“Europe has been hurt relatively by geopolitical uncertainty, but at 12x it is far from priced for perfection, and will benefit as oil price and interest rates retreat back lower, in our view. Bottom up, European earnings growth is looking better this year, after a prolonged soft patch.”

VGK represents one of the best ETFs for anyone who wants European equity exposure for a song.

Want to learn more about VGK? Check out the Vanguard provider site. 

Related: The 7 Best Index Funds for Beginners

9. Franklin High Yield Corporate ETF

---

• Type: Tactical
• Style: High-yield bond
• Assets under management: $1.2 billion
• SEC yield: 6.5%*
• Expense ratio: 0.40%, or $4.00 annually on a $1,000 investment

What is FLHY?

Franklin High Yield Corporate ETF (FLHY) is an actively managed bond ETF that typically focuses on corporate debt with below-investment-grade ratings (aka “high yield,” aka “junk”). A team of managers focuses on fundamentals and has an eye for the relative long term (three to five years). 

What does FLHY hold?

The ETF’s managers—Bryant Dieffenbacher, Glenn Voyles, Jonathan Belk, and Robert Salvin—currently spread their assets across about 290 holdings, which is tighter than you’ll get out of comparable index funds. While the portfolio is concentrated in U.S. bonds, it’s not entirely domestic, with the team holding a roughly 15% slug of international corporate debt (mostly European).

Credit quality is naturally low, with about half of assets invested in BB bonds (the highest level of junk debt) and another 35% in B-rated bonds. That’s a little riskier than some of the larger junk index funds, but it’s not going out over a ledge.

The portfolio’s average weighted maturity (how long until the bonds mature) is 3.9 years, while duration (a measure of risk) is 3.0 years. The latter implies that for every 1-percentage-point increase in market interest rates, the fund would experience a short-term decline of 3%, and vice versa.

Why should you consider FLHY?

Markets largely expected the Federal Reserve to deliver several interest-rate cuts in 2026, but inflation pressure have caused the central bank to stay its hand. Indeed, futures markets indicate a decent chance that the Fed raises its rate before the year ends.

“Expectations of steepening yield curves no longer characterize fixed income markets. Instead, investors are confronting a period of ‘bear flattening,’ in which shorter- term yields rise more rapidly than longer-term yields,” says the Franklin Templeton Institute in its 2026 outlook. “While this environment presents challenges for duration-sensitive investors, it also creates attractive income opportunities. … Corporate bond markets also remain attractive. Strong corporate profitability and healthy balance sheets suggest that credit spreads should remain relatively stable despite changing expectations for central bank policy. Consequently, investors can benefit from higher levels of income without assuming excessive credit risk.

“Within credit markets, U.S. high-yield bonds are particularly appealing, offering all-in yields above 6% with minimal duration exposure.”

FLHY fits that bill for that kind of coverage, and under the watchful eye of seasoned managers. That could make it one of the best ETFs for the rest of 2026.

* SEC yield reflects the interest earned across the most recent 30-day period. This is a standard measure for funds holding bonds and preferred stocks.

Want to learn more about FLHY? Check out the Franklin Templeton provider site. 

Related: 8 Best High-Yield Dividend Stocks: The Pros’ Picks

10. State Street SPDR Portfolio S&P 500 ETF

---

• Type: Core
• Style: U.S. large-cap stock
• Assets under management: $159.3 billion
• Dividend yield: 1.0%
• Expense ratio: 0.02%, or 20¢ annually on a $1,000 investment

What is SPYM?

The State Street SPDR Portfolio S&P 500 ETF (SPYM) is an index fund that tracks the S&P 500: America’s chief stock-market index, made up of publicly traded stocks representing 500 of the largest U.S.-listed companies.

What does SPYM hold?

The SPDR Portfolio S&P 500 ETF holds the 500 companies in the S&P 500 index—a collection of predominantly large-cap companies. That means it offers exposure to all 11 market sectors, but it doesn’t do so evenly. Right now, technology is the biggest industry weight at 36% of SPYM’s assets, followed by financials (12%), communication services (11%), and consumer discretionary (10%). However, utilities, real estate, and materials each account for less than 3% of assets.

Related: The Best Dividend Stocks: 10 Pro-Grade Income Picks for 2026

The reason for this imbalance? The S&P 500 is a market cap-weighted index, which means the larger the stock, the more influence it has—and tech contains some of the biggest companies in the world, including multitrillion-dollar firms Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT).

Just remember: What’s big today might not be big tomorrow. Stock weights always change, so the S&P 500’s sector weights commonly change over time as the economy evolves.

Why should you consider SPYM?

Financial advisors frequently recommend that you make an S&P 500 tracker—any index fund that replicates the performance of the S&P 500—part of your portfolio’s core. That’s in part because the S&P 500 gives you exposure to a diversified list of 500 blue-chip companies, which provides a balance of growth and income potential. 

But that’s also because, if you’re looking for that kind of large-cap exposure, index funds typically do better than your average human manager. According to S&P Dow Jones Indices data through the end of 2025, 86% of large-cap funds have underperformed the S&P 500 over the trailing 10 years; that number creeps up to 90% if you look at the trailing 15 years.

“I know guys that rate active managers in all these categories, and even they’re like, ‘I’m not buying actively managed large blend; I’m just indexing’ because it’s so brutally tough to beat a dirt-cheap index fund in the large blend category,” says Daniel Sotiroff, Senior Analyst for ETF and Passive Strategies at Morningstar.

There are only a handful of S&P 500 ETFs, but combined, they account for nearly $3 trillion in assets. State Street’s SPYM is by far the smallest, at around $160 billion in assets. So, why opt for the little guy?

If literally all else is equal, lower fees will equal better performance. And as of right now, it doesn’t get cheaper than SPYM. “State Street recently lowered the fees on this ETF (along with a ticker change), making it the cheapest of the S&P 500 ETFs,” Ullal says. 

Want to learn more about SPYM? Check out the State Street Investment Management provider site. 

Make sure you sign up for The Weekend Tea, Young and the Invested’s free weekly newsletter that over 10k monthly readers use to level up their money know-how.

11. Vanguard Wellington Dividend Growth Active ETF

---

• Type: Core
• Style: U.S. dividend-growth stock
• Assets under management: $29.4 million
• Dividend yield: 1.0%*
• Expense ratio: 0.40%, or $4.00 annually on a $1,000 investment

What is VDIG?

The Vanguard Wellington Dividend Growth Active ETF (VDIG) is a large-cap fund that holds high-quality companies that increase their dividends over time.

What does VDIG hold?

Unlike index funds that have strict dividend-growth criteria for inclusion, Wellington Management’s Timothy Casaletto and G. Thomas Levering have discretion to build their own portfolio—but the fund’s holdings “typically (but not always) are large-cap, undervalued relative to the market, and show potential for increasing dividends.”

Currently, they run a very tight portfolio of 37 dividend-growth stocks—including names such as Broadcom (AVGO), Eli Lilly (LLY), and Mastercard (MA)—that boast varying lengths of payout-improvement streaks.

Why should you consider VDIG?

“If you’re looking for a core large blend building block, [VDIG] lands smack-dab in the middle of the style box,” Sotiroff says. “It’s a very high-conviction portfolio. But we have a lot of experience with that strategy in mutual fund form, we’ve been big fans of it for a long while now.”

But while VDIG might be similar to other Wellington-managed Vanguard dividend-growth funds—specifically, Vanguard Dividend Growth Fund (VDIGX) and Vanguard Advice Select Dividend Growth Fund (VADGX)—it’s not an exact clone.

“It has a really good track record, and because it’s a dividend-growth strategy, it won’t be leaning heavily into those overpriced tech names,” Sotiroff says. “It’ll be a little more value-oriented in that regard. So if there is a big blowup from these big tech companies trading at extreme valuations, this should hold up pretty well.”

* VDIG, which was launched in November 2025, pays dividends annually. The yield has been calculated by extrapolating the 2025 distribution across a full year.

Want to learn more about VDIG? Check out the Vanguard provider site.

Related: The 10 Best ETFs for Beginners

12. Distillate U.S. Fundamental Stability & Value ETF

---

• Type: Core
• Style: U.S. value stock
• Assets under management: $1.9 billion
• Dividend yield: 1.2%
• Expense ratio: 0.39%, or $3.90 annually on a $1,000 investment

What is DSTL?

The Distillate U.S. Fundamental Stability & Value ETF (DSTL) is a value fund—that is, it holds stocks that are relatively undervalued compared to other stocks. But what sets DSTL apart is how it determines value.

What does DSTL hold?

DSTL builds its portfolio by taking a universe of the 500 largest U.S. companies, then eliminating any stocks deemed expensive by free cash flow/enterprise value, as well as any companies with either high debt, volatile cash flows, or both. The resultant 100-stock portfolio doesn’t look a thing like traditional value funds, with technology (28%) and healthcare (22%) making up roughly half of assets right now.

Most value funds measure value by metrics such as price-to-earnings (P/E), price-to-sales (P/S), and even price-to-book (P/B). But the Distillate ETF focuses on free cash flow (FCF)—whatever profits are left once a company makes operating and capital expenditures needed to maintain the business—divided by enterprise value (EV), a measure of company size that takes market capitalization, then factors in debt owed and cash on hand.

Why this lesser-used metric? Thomas Cole, CEO and co-founder of Distillate Capital, explains that while many accounting measures, including earnings and even revenues, can be “adjusted,” you can’t adjust cash. Cash is just cash.

Why should you consider DSTL?

For one, it works. Distillate’s value ETF came to life in late 2018. It has delivered a 162% total return since then, outperforming the CRSP US Large Cap Value Index by about 35 percentage points.

DSTL didn’t fare as well in 2025, underperforming by about 7 percentage points, and it has struggled against more traditional funds in 2026, too. However, relative valuations are setting the ETF up for a more productive rest of the year.

“The S&P 500, on a free cash flow basis, has only been more expensive than it is right now in the very late innings of the [dot-com bubble]. And that’s our preferred metric,” Cole says. “But we looked at [valuations] in a number of different ways, and if you take the available history of whatever series you use—reported earnings, operating earnings, EBITDA, whatever—you’re still in the 90th or more percentage in terms of percentile of valuation. The market’s expensive. And not only has the S&P 500 hardly ever been more expensive than it is now, but the value benchmark is also pretty expensive with some of the industrials and utilities getting caught up in the AIR run.

“But curiously, our 100-stock large-cap portfolio still has the absolute level of free cash flow yield that it did in 2017. It’s actually a little higher than it was back then. So you know, it tells you there’s good value below the surface.”

Want to learn more about DSTL? Check out the Distillate Capital provider site.

Related: The 11 Best Fidelity Funds to Buy Now

13. iShares LifePath Target-Date ETFs

---

• Type: Core
• Style: Target-date
• Assets under management: $647.0 million*
• Dividend yield: Varies by fund
• Expense ratio: 0.08%-0.12%, or 80¢-$1.20 annually on a $1,000 investment

What are the iShares LifePath Target-Date ETFs?

We’re only counting them as one, but the iShares LifePath Target-Date ETFs are actually a series of funds.

Target-date funds are an all-in-one retirement investment solution that you can theoretically buy at any time, then hold until you retire (or, often, keep holding through retirement). Each target-date fund will be attached to a date the holder is targeting to retire, usually in five-year increments—so, a target-date fund provider will have funds for 2040, 2045, 2050, and so on. For each fund, the manager will own a combination of stock and bond funds, and adjust how much of each they hold over time. These funds typically start aggressively (more stocks than bonds), but the closer the fund gets to the target date, the more conservative the manager gets, buying more bonds and selling more stocks.

iShares’ LifePath series currently has nine target-date funds (2030 through 2070), as well as a retirement ETF that’s meant for people who are very close to or already in retirement.

What do the iShares LifePath Target-Date ETFs hold?

Each LifePath ETF holds more or less the same funds, just in different concentrations. But we’ll use the iShares LifePath Target Date 2045 ETF (ITDE) as an example. It’s currently 85% invested in stocks, and 15% invested in bonds and cash. It does this by holding other iShares ETFs, including the iShares Russell 1000 ETF (IWB, large- and mid-cap U.S. stocks), iShares Core MSCI International Developed Markets ETF (IDEV, developed-market international stocks), and iShares 10+ Year Investment Grade Corporate Bond ETF (IGLB, investment-grade corporate debt), among others. Over time, more of its assets will be invested in bond funds, and fewer of its assets will be invested in stock funds.

The iShares LifePath Target Date 2070 ETF (ITDJ), by comparison, is 99% invested in stocks, and just 1% invested in bonds and cash.

Why should you consider iShares LifePath Target-Date ETFs?

The iShares LifePath Target-Date ETFs, which launched in October 2023, are the only target-date ETFs in existence (for now). All other target-date products are mutual funds, and most people invest in them through 401(k)s and other employer-sponsored retirement plans.

But you can buy LifePath ETFs in any kind of account—even plain ol’ brokerage accounts. That makes them an exceedingly flexible product for investors doing their retirement planning.

“It doesn’t make sense for [investors with advisors] because they don’t want to pay an advisor just to own one ETF,” says Todd Rosenbluth, Head of Research & Editorial, TMX VettaFi. “But if you’re doing this on your own and you have a plan in mind, [the iShares target-date ETFs] are good products.”

* Assets listed are across all LifePath ETFs.

Want to learn more about the LifePath target-date ETFs? Check out the iShares provider site.

Related: Best Target-Date Funds: Fidelity vs. Schwab vs. T. Rowe vs. Vanguard

14. iShares MSCI USA Min Vol Factor ETF

---

• Type: Defensive
• Style: U.S. minimum-volatility stock
• Assets under management: $23.2 billion
• Dividend yield: 1.5%
• Expense ratio: 0.15%, or $1.50 annually on a $1,000 investment

What is USMV?

The iShares MSCI USA Min Vol Factor ETF (USMV) is an index ETF that invests in a portfolio of companies that in aggregate is less volatile in nature than the broader U.S. equity market.

What does USMV hold?

To understand USMV’s portfolio, it’s helpful to know the difference between “low volatility” and “minimum volatility.”

Both strategies are designed to reduce volatility, but they do so in two starkly different ways. Low-vol funds simply hold the lowest-volatility stocks within their selection universe. Min-vol funds try to create the lowest-volatility portfolio possible, even if doing so involves owning some volatile stocks. (How would that work? If you own several stocks that are volatile, but whose performances aren’t really correlated with one another, they could balance each other out to an extent, creating a portfolio that overall doesn’t exhibit much volatility.)

The iShares minimum-volatility ETFs start with an MSCI market index. They look at volatility on a single-stock level, but they also analyze correlations between stocks, sectors, and (where applicable) countries. They also constrain sectors and countries to within 5% of their weighting in the index—so, if consumer staples made up 10% of the index, it could make up no more than 15% and no less than 5% of the fund’s holdings. From there, they optimize the portfolio to create a minimum-volatility index.

The iShares MSCI USA Min Vol Factor ETF holds 170 U.S. stocks that, from a sector perspective, are pretty similar in balance to the S&P 500. Technology stocks are best represented, followed by healthcare and financials. Past that, the ordering differs, but every sector weight is still within just a few percentage points of not just its underlying index (the MSCI USA Index), but the S&P 500, as well.

Why should you consider USMV?

Market volatility usually goes hand-in-hand with big drops in stocks. So, naturally, low- and min-volatility ETFs are considered a smart way to hedge against a downward swing in the market.

“We really like the iShares min-vol ETFs,” Morningstar’s Sotiroff says. “If you want just a defensive equity portfolio, those are pretty good to go with. They consistently show up when you go into a drawdown and perform how you would expect.”

But you should be aware of the risk of owning any low- or min-vol product.

“When the market just keeps going higher and higher, they don’t look all that great,” Sotiroff says. “Some people don’t understand there’s a tradeoff—you’re not going to participate [as much] in the upside. So they’re very good as defensive ETFs, but that’s also their shortfall.”

Want to learn more about USMV? Check out the iShares provider site.

Related: 9 Best Dividend Stocks for Beginners

15. ProShares Short S&P500

---

• Type: Defensive
• Style: Inverse stock
• Assets under management: $941.3 million
• Dividend yield: 4.2%
• Expense ratio: 0.89%, or $8.90 annually on a $1,000 investment

What is SH?

The ProShares Short S&P500 (SH) is a fund that, very simply put, goes up when the market goes down. More specifically, it provides the inverse daily return of the S&P 500, which means if the S&P 500 declines by 1% on Monday, SH will gain 1% (minus expenses) on Monday.

What does SH hold?

This is the most complicated portfolio of any fund on this list. SH primarily holds a number of futures, swaps, and Treasury bills to replicate the inverse-S&P 500 performance it’s looking for. While the average investor should always “look under the hood” in any ETF they buy, in this case, doing so will be more confusing than educational.

Why should you consider SH?

“Always have an escape plan.” It’s a sentimental line delivered by Desmond Llewellyn’s Q during his farewell in The World Is Not Enough … and it’s darn fine advice for any tactical investor. 

One of the best ways to avoid deep losses in stocks is to not own stocks, but if you’re reading this, you probably don’t want to sell your stocks. For one, you would lose any attractive “yields on cost” (the actual dividend yield you receive from your initial cost basis) on stocks you’ve owned for a while. And if you time the market wrong, you could miss the rebound.

One alternative? Hedge the market by buying shares of SH if you think the market is in for pain. If you’re right, you can offset some of the losses that your long holdings might incur during a down market—like many investors were rewarded for doing in February 2020 when it became apparent that COVID-19 was going to hit the U.S.

SH has its own risks. For one, that inverse exposure is only on a daily basis—over a long period of time, it’s not a perfect 1-for-1 relationship. The fund could, for instance, go up 8% across a year in which the S&P 500 declines 10%. And naturally, if your stocks go up, your portfolio’s gains won’t be as great as they would’ve been.

But it’s a better risk than jettisoning your stocks. And it’s a more manageable hedge than inverse leveraged ETFs. Still, only tactical investors with high risk tolerance should consider this ETF.

Want to learn more about SH? Check out the ProShares provider site. 

Related: The 10 Best ETFs to Beat Back a Bear Market

16. JPMorgan Equity Premium Income ETF

---

• Type: Defensive
• Style: Covered call
• Assets under management: $45 billion
• Dividend yield: 8.1%
• Expense ratio: 0.35%, or $3.50 annually on a $1,000 investment

What is JEPI?

The JPMorgan Equity Premium Income ETF (JEPI) is an actively managed ETF that generates income by selling covered calls: an income-generating options strategy in which an investor sells call options on a stock or fund while owning an equivalent amount of shares of that stock or fund. In JEPI’s case, the strategy centers around the S&P 500 Index.

What does JEPI hold?

Managers Hamilton Reiner, Raffaele Zingone, Matt Bensen, and Judy Jansen have built a portfolio of about 125 stocks within the S&P 500. They also write approximately 2% out-of-the-money call options on the S&P 500 Index. “It’s a quarter every week,” JPMorgan Asset Management’s Maier says. “A quarter of the portfolio is rewritten for a month, and then a week later, a month. So it’s staggered.”

Why should you consider JEPI?

When you sell covered calls, you receive a premium for selling the call options. If the underlying asset’s price rises above the call price at some point before the option expires, you’ll likely be assigned, and your shares will be called away. If the price remains below the call price, the option will expire worthless. Either way, you keep the premium. The ultimate effect of this strategy is that you constantly generate income while protecting against downside in the assets you hold, though you limit the amount of upside you can enjoy.

With JEPI specifically, “the underlying portfolio is managed with lower volatility than the S&P 500. So when you have the option overlay, combined with the underlying lower-volatility portfolio, it provides volatility that’s about 60% of the S&P 500 and yields between 7% and 9%,” Maier says.

“We spent a lot of time looking at covered-call funds. It’s one of those areas where there’s a market for this, but a lot of this has gotten out of control,” Sotiroff adds. “But the JEPI ETF, we actually rated that, and within that category (derivative income), that’s one we like. It’s pretty reasonably structured, there’s a defensive element to the underlying stock portfolio, it’s not doing anything crazy with the options.”

In other words, JEPI could be one of the best ETFs to buy for the rest of 2026 and for years to come … if you need defense. But this isn’t necessarily an appropriate buy-and-hold-forever investment for most people.

Want to learn more about JEPI? Check out the JPMorgan Asset Management provider site.

Related: 8 Best High-Yield Dividend ETFs for Income-Hungry Investors