The Best ETFs for May 2025 and How to Invest

Exchange-traded funds can be an excellent entry point into the stock market for new investors. They’re cheap and typically carry lower risk than individual stocks since a single fund holds a diversified collection of investments.

How to buy an ETF

Investing in ETFs takes just a few steps. First, you’ll need a brokerage account. Then, you’ll need to find a low-cost ETF that suits your goals, using a screener tool. Once you’ve found the right fund, just place the trade and monitor your investment.

1. Open a brokerage account

You’ll need a brokerage account to buy and sell securities like ETFs. If you don’t already have one, see our resource on brokerage accounts and how to open one. This can be done online, and many brokerages have no account minimums, transaction fees or inactivity fees. Opening a brokerage account may sound daunting, but it’s really no different than opening a bank account.

If you’d rather have someone do the work of investing for you, you might be interested in opening an account with a robo-advisor. Robo-advisors build and manage an investment portfolio for you, often out of ETFs, for a low annual fee (typically 0.25% of your account balance). Because robo-advisors offer curated investment portfolios, you may not be able to find and invest in the ETFs outlined above. But that’s part of their appeal — the robo-advisor picks investments for you. (Here’s our list of the top robo-advisors.)

To screen and invest in the specific ETFs you want, you’ll need a brokerage account at an online broker.

» Want to compare options? See our full list of the best brokers for ETF investors.

2. Choose ETFs with screening tools

Now that you have your brokerage account, it’s time to decide which ETFs to buy. Whether you’re after the best-performing broad index ETFs or you’d like to search for others on your own, there are a few ways to narrow your ETF options to make the selection process easier.

Most brokers offer robust screening tools to filter the universe of available ETFs based on a variety of criteria. There are thousands of ETFs listed in the U.S. alone, so screeners are critical for finding the ETFs you’re looking for. Try using the criteria below in your brokerage’s screener to narrow them down.

• Administrative expenses. Also known as expense ratios, these expenses cut into profit, so the lower the better. According to the Investment Company Institute, the average expense ratio for equity index ETFs is 0.15%^[0]

  Investment Company Institute. Trends in the Expenses and Fees of Funds, 2023.

  View all sources

  . This could be a good range to start with in your screener, but some popular ETFs have expense ratios lower than this.

• Commissions. These are fees you pay per transaction when you buy or sell an ETF. Commissions are rare at most major online brokers, but it’s good to check before you buy. Brokers that charge a commission often offer select ETFs commission-free.

• Volume. This shows how many shares traded hands over a given time period. It’s an indicator of how popular a particular fund is.

• Holdings. You’ll be able to see the top holdings in the fund, which simply means the individual companies the fund invests in.

• Performance. While past performance doesn’t indicate future returns, it can still be useful to compare the history of similar funds. Look at a fund's long-term track record, such as its three, five or 10-year performance, to get a sense of how it has performed historically.

• Trading prices. ETFs trade like stocks — you’ll be able to see current prices, which dictate how many shares you can afford to buy.

• Asset class. Stocks and bonds dominate ETF holdings. But some funds are composed of commodities, currencies, alternative investments, a combination of asset types, etc.

• Geography. Some ETFs hold global investments. Others focus on specific regions, countries and even individual states.

• Segment. This is a way to categorize the assets that make up an ETF’s holdings. For equity-based funds, think company size or industry. For fixed-income ETFs, think corporate, municipal or government bonds.

• Investment style. ETFs can be a useful way to express a specific investment strategy. Examples include aligning investments with your values, investing in growth- or value-based funds, or investing in an actively managed fund.

» Need to back up? Read our guide to ETFs

3. Place the trade

The process for buying ETFs is very similar to the process for buying stocks. Navigate to the “trading” section of your brokerage’s website; in this context, “trade” means you’re either buying or selling an ETF. You’ll buy the ETF using its ticker symbol — here’s more on that and other basic terms you’ll need to know:

Before you execute your order, you’ll have an opportunity to double-check that everything is correct. Make sure your order is set up as intended: Check the ticker symbol (ETFs with similar ticker symbols can be wildly different), order type and that you haven’t made a potentially costly typo with any numbers — for example, typing 1,000 shares when you intended to buy only 100.

4. Sit back and relax

Congratulations, you’ve just bought your first ETF. These funds can help form the basis of a well-diversified portfolio and serve as the first step in a long-lasting investment in the markets. There’s no need to compulsively check how this ETF (or your other investments) is performing, but you can access that information when you need it by checking the ticker symbol on your brokerage’s website or even just by typing it into Google.

Best large-cap ETFs

One way for beginner investors to get started is to buy ETFs that track broad market indexes, such as the S&P 500. In doing so, you’re investing in some of the largest companies in the country with the goal of long-term returns. Other factors to consider include risk and the fund’s expense ratio.

To arrive at our list, we looked for ETFs with expense ratios below 0.5% that hold the largest U.S.-based companies. We excluded leveraged and inverse ETFs. The results are listed below in order of one-year performance.

Best small-cap ETFs

Our table below shows small-cap ETFs that invest in companies with values under $2 billion and show strong growth potential. However, small-cap companies come with additional risks compared with investing in more established companies. (Learn more about small-cap ETFs here.)

Best bond ETFs

Bond ETFs are a low-risk investment that is made up of bonds and other fixed-income investments. This list excludes actively managed and leveraged ETFs.

Categories of ETFs

There are many types of ETFs that can expose your portfolio to different assets and markets. By including other sectors and types of investments within your investment portfolio, you're diversifying your assets.

Diversification brings down risk. In the event that one company or sector does not perform well, you have many others that may support the performance of your portfolio as a whole. You should evaluate your financial plan to decide if any of these types of ETFs are right to include in your portfolio. You'll need to consider your investment goals and risk tolerance.

Here's a list of pages that show the best-performing ETFs in various categories: