The Best Equity ETFs

There’s a lot to like about exchange-traded funds.

• ETFs are easy to buy and sell.
• ETFs are generally low-cost.
• Depending on their investment set, ETFs are usually tax-efficient.
• ETFs are pretty transparent: What you see is what you get.

Given these qualities, ETFs can make terrific portfolio building blocks because they allow you to get exposure to the parts of the market that you want—and to avoid the parts of the market you don’t want.

A good place to start your screening process is with the Morningstar Analyst Rating. ETFs that earn our top rating—Gold—are those that we think are most likely to outperform over a full market cycle.

Today, we’re taking a look at the best stock ETFs in three main asset-allocation categories: U.S. large company stocks, U.S. mid-cap and small company stocks, and international stocks.

The 14 Best Large-Cap Stock ETFs to Buy Now

These ETFs all land in one of Morningstar’s U.S. large-cap stock categories and earn our top Analyst Rating of Gold as of April 2023.

1. Dimensional US Core Equity 2 ETF DFAC
2. Dimensional US Core Equity Market ETF DFAU
3. iShares Core S&P 500 ETF IVV
4. iShares Core S&P Total US Stock Market ETF ITOT
5. Schwab US Broad Market ETF SCHB
6. Schwab US Large-Cap ETF SCHX
7. SPDR Portfolio S&P 1500 Composite Stock Market ETF SPTM
8. SPDR Portfolio S&P 500 ETF SPLG
9. Vanguard Dividend Appreciation ETF VIG
10. Vanguard Growth ETF VUG
11. Vanguard Large-Cap ETF VV
12. Vanguard S&P 500 ETF VOO
13. Vanguard Total Stock Market ETF VTI
14. Vanguard Value ETF VTV

The funds in this group provide exposure to the stocks of large companies, making them fine anchors for an equity portfolio. But there are strategic differences among them.

Some ETFs in the group—including iShares Core S&P 500 ETF and Vanguard S&P 500 ETF—track the S&P 500. As a result, they provide access to large-cap stocks representing about 80% of the U.S. stock market.

Others on the list—such as iShares Core S&P Total U.S. Stock Market ETF, Schwab U.S. Broad Market ETF, and Vanguard Total Stock Market ETF—follow broader market indexes that include more stocks, some of which are smaller-cap names. While these funds also land in the large-blend Morningstar Category, they expose investors to a wider pool of stocks and market capitalizations.

Still other ETFs on the list provide exposure to a subset of stocks. Vanguard Dividend Appreciation ETF, for instance, exclusively focuses on dividend-paying stocks. Moreover, some names on the list focus on growth stocks, while others explore value stocks.

You can find more top-rated ETFs in The Best ETFs and How They Fit in Your Portfolio.

The 6 Best Mid- and Small-Cap Stock ETFs for 2023

These ETFs all land in one of Morningstar’s U.S. mid- or small-cap stock categories and earn our top Analyst Rating of Gold as of April 2023.

1. Vanguard Extended Market ETF VXF
2. Vanguard Mid-Cap ETF VO
3. Vanguard Mid-Cap Growth ETF VOT
4. Vanguard Mid-Cap Value ETF VOE
5. Vanguard Small-Cap Growth ETF VBK
6. Vanguard Small-Cap Value ETF VBR

Mid- and small-cap stocks certainly aren’t portfolio essentials, especially if you already own one of the broader market index ETFs from the large-blend category—if you do, you already have some mid- and small-cap stock exposure.

However, if you have a large-stock-focused portfolio or if you’d like to boost your weighting in small company stocks, you’ll find what you need among our Gold-rated ETFs in the mid- and small-cap categories.

Some ETFs focus exclusively on mid-cap stocks, while others target smaller company stocks; in addition, some skew toward growth stocks, while others favor value stocks.

You can find more top-rated ETFs in The Best ETFs and How They Fit in Your Portfolio.

The 9 Best International Stock ETFs to Buy and Hold

These ETFs all land in one of Morningstar’s foreign or global stock categories and earn our top Analyst Rating of Gold as of April 2023.

1. Dimensional International Core Equity Market ETF DFAI
2. Dimensional International Small Cap Value ETF DISV
3. Dimensional International Small Cap ETF DFIS
4. iShares Core MSCI Total International Stock ETF IXUS
5. iShares MSCI ACWI ETF ACWI
6. Vanguard FTSE All-World ex US ETF VEU
7. Vanguard FTSE All-World ex US Small Cap ETF VSS
8. Vanguard Total International Stock ETF VXUS
9. Vanguard Total World Stock ETF VT

Like mid- and small-cap funds, international-stock ETFs certainly aren’t must-owns. After all, from a risk-reduction standpoint, international stocks aren’t great diversification tools for a portfolio heavy in U.S. stocks. But remember that investment opportunities exist around the globe; many think it’s a mistake to limit your investments to U.S. stocks.

The Gold-rated ETFs here target stocks of varying sizes and styles across international markets. If none of these ETFs fits the bill for you, you can find additional top rated ETFs in The Best ETFs and How They Fit in Your Portfolio.

How to Find the Best ETFs for the Long Term

Many investors equate ETFs with low-cost indexing. But the ETF marketplace has grown increasingly complicated. Some ETFs track a very narrow part of the market or pursue specific themes. Some ETFs invest based on a particular factor or a combination of them. And now there are even actively managed ETFs.

Use these Morningstar resources to help find the best ETFs for the long term:

• Learn about the types of exchange-traded funds, their costs, and how to invest in them by reading Morningstar’s Guide to ETF Investing.
• Find the highest-rated ETFs across all investment categories in The Best ETFs and How They Fit in Your Portfolio.
• Review Morningstar director of personal finance Christine Benz’s suggested ETF portfolios for those saving for or already in retirement, including Tax-Efficient Retirement-Saver Portfolios for ETF Investors, Tax-Deferred Retirement-Saver Portfolios for ETF Investors, ESG Tax-Deferred Retirement-Saver Portfolios for ETF Investors, Tax-Deferred Retirement-Bucket Portfolios for ETF Investors, and Tax-Deferred ESG Retirement-Bucket Portfolios for ETF Investors.
• Research ETFs based on your own selection criteria by using our Morningstar Investor Screener. The tool, which is available to Morningstar Investor members, allows investors to screen ETFs based on various criteria, including asset class, Morningstar Category, Analyst Rating, and fee level.
• Visit Morningstar’s ETF page for the latest articles and videos from our ETF specialists.

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