Just past the midpoint of 2024, stock markets are thriving thus far this year. The S&P 500 has gained roughly 17% year to date, led by big gains for big tech. More recently, that trend has reversed, with small caps outperforming large caps.
Will markets continue to have bullish momentum in the back half of 2024, despite some geopolitical uncertainty and other market risks? If so, which trends might prevail? If you are thinking about adding ETFs to your investment mix based on your outlook, here are 5 ETF screens from the Fidelity.com ETF Screener, plus the top 10 results for each.
Sector ETFs
After surging 60% in 2023, the tech sector is on pace to once again outpace the rest of the market. While the recent pullback in some big tech stocks has some investors wondering if the AI craze is dulling, for example, there are a variety of reasons to think tech could maintain its pole position in 2024 and beyond. If you think that momentum may continue, here are the 10 largest technology sector ETFs by net assets, as of July 25, 2024:
- Vanguard Information Technology Index Fund ETF Shares (
) - The Technology Select Sector SPDR Fund (
) - Vaneck Semiconductor ETF (
) - iShares US Technology ETF (
) - iShares Semiconductor ETF (
) - Fidelity MSCI Information Technology Index ETF (
) - iShares Expanded Tech-Software Sector ETF (
) - First Trust Nasdaq Cybersecurity ETF (
) - First Trust Dow Jones Internet Index Fund (
) - iShares Global Tech ETF (
) - iShares Expanded Tech Sector ETF (
)
Screens can serve as an excellent jumping off point for generating ideas. After running any screen, there are a number of factors to consider. For example, with a sector screen, you should be aware of the potential for concentration risk. This is basically equivalent to putting your eggs in a single basket—if you are not diversified across the rest of your investments. Because of their narrow focus, sector investments tend to be more volatile than investments that diversify across many sectors and companies. Be sure to consider how a sector-themed ETF fits in with the rest of your investments.
Large-cap ETFs
Despite calls for small caps to catch up, large caps are on a multiyear market leadership run. If you have a positive view on large-cap stocks, you could consider the large-cap blend ETF screen on Fidelity.com. Here are the top 10 results sorted by net assets, as of July 25, 2024:
- SPDR S&P 500 ETF Trust (
) - iShares Core S&P 500 ETF (
) - Vanguard S&P 500 ETF (
) - Vanguard Total Stock Market Index Fund ETF Shares (
) - Vanguard Dividend Appreciation Index Fund ETF Shares (
) - iShares Core S&P Total US Stock Market ETF (
) - Invesco SYP 500 Equal Weight ETF (
) - iShares MSCI USA Quality Factor ETF (
) - Schwab US Large-Cap ETF (
) - SPDR Portfolio S&P 500 ETF (
)
An important step you can take after running a screen is to evaluate the quality of the list that is generated. Does it appear that the screen results match your search criteria? Do they align with your objectives? Assessing the screen results as a whole can help you figure out if it's finding what you are interested in. This list includes multiple passive index funds, which carry risks. And remember that stock markets can be volatile and may fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing involves risks, including the loss of principal.
Small-cap ETFs
As previously noted, small-cap stocks have outperformed large-cap stocks over the past several weeks. Some investors have been touting the potential for small caps based on attractive valuations and the proclivity for market leadership to rotate over time. If you are interested in small-cap ETFs, you can explore the small-cap blend theme on Fidelity.com. Here are the top 10 results sorted by net assets, as of July 25, 2024:
- iShares Core S&P Small-Cap ETF (
) - iShares Russell 2000 ETF (
) - Vanguard Small-Cap Index Fund ETF (
) - Schwab US Small-Cap ETF (
) - SPDR Portfolio S&P 600 Small Cap ETF (
) - Vanguard Russell 2000 Index Fund ETF Shares (
) - Schwab Fundamental US Small Company Index ETF (
) - Dimensional US Small Cap ETF (
) - Vanguard S&P Small-Cap 600 Index Fund ETF Shares (
) - Invesco FTSE RAFI US 1500 Small-Mid ETF (
)
After running a screen that you think is generating investments that match what you are looking for, you can then dig deeper. For example, you should be comfortable with the risk that any investment brings. Small caps are inherently more risky than large caps, so these small-cap ETFs require a little extra due diligence to understand what you are considering owning.
Bond ETFs
Although bond performance hasn’t matched that of stocks thus far in 2024, some investors think it’s a great time for bonds. If you are interested in adding bond ETFs to your investment mix, there are several bond ETF screens you could consider—including the intermediate core bond fund screen, which invests primarily in investment-grade fixed income investments, such as government, corporate, and securitized debt issues. Here are the top 10 results, sorted by net assets, as of July 25, 2024:
- iShares Core US Aggregate Bond ETF (
) - Vanguard Total Bond Market Index Fund ETF Shares (
) - iShares Core Total USD Bond Market ETF (
) - Vanguard Intermediate-Term Bond Index Fund ETF Shares (
) - Fidelity Total Bond ETF (
) - SPDR Portfolio Aggregate Bond ETF (
) - Schwab US Aggregate Bond ETF (
) - Dimensional Core Fixed Income ETF (
) - First Trust TCW Opportunistic Fixed Income ETF (
) - Pimco Active Bond Exchange-Traded Fund (
)
Given the relatively unique aspects of bond ETFs, it may help to first understand how bond ETFs work. Compared with bonds and bond mutual funds, bond ETFs have unique characteristics, including intraday trading and holdings transparency. Moreover, you should understand an ETF's components, which you can find on its ETF snapshot page on Fidelity.com, under Portfolio Composition. On that page, you can also find the ETF's style (value, growth, or blend) and size (large, mid, or small), as well as ratings and key statistics. Investing in bonds involves risk, including interest rate risk, inflation risk, credit and default risk, call risk, and liquidity risk.
Digital asset (cryptocurrency) ETFs
With the January launch of the first ever bitcoin ETP (ETFs are a type of ETP), the number of digital asset funds has proliferated. If you are bullish on cryptocurrencies, here are the top 10 results sorted by net assets, as of July 25, 2024:
- iShares Bitcoin Trust (
) - Grayscale Bitcoin Trust ETF BTC (
) - Fidelity Wise Origin Bitcoin Fund (
) - Grayscale Ethereum Trust ETH (
) - Ark 21Shares Bitcoin ETF (
) - Bitwise Bitcoin ETF (
) - Proshares Bitcoin Strategy ETF (
) - Bitwise 10 Crypto Index Fund (
) - Amplify Transformation Date Sharing ETF (
) - Vaneck Bitcoin Trust ETF (
)
Of course, cryptocurrencies are highly volatile, may be more susceptible to market manipulation, cryptocurrency holders do not benefit from the same regulatory protections as most other registered investments, and cryptocurrencies are not insured by the FDIC. Spot crypto ETPs are for investors with a high risk tolerance. These funds offer an investment in a single cryptocurrency. Digital asset ETPs are subject to all of these risks, plus some others. You can click on the tickers above to access price performance and other information, and be sure you understand the risks of investing in cryptocurrencies before considering a cryptocurrency ETP.
Digging deeper into your ETFs
If you think one or more of the ETFs identified by a screen is worth considering to help manage the risk in your portfolio or achieve your objectives, your next step should be to research it further. And always remember to evaluate a fund's costs, including the following:
- Expense ratio: Look for low expense ratios to help reduce your overall costs.1
- Bid-ask spread: Look for small bid-ask spreads to help reduce costs of investing.
- Tracking error: Look for a low tracking error to find ETFs that indicate a better job of replicating their benchmark indexes.
If you find ETFs with similar objectives, you could compare their expense ratios, bid-ask spreads, and/or tracking error to find the better deal. You can filter for all of these factors using the ETF Screener.