Are you looking to diversify your investment portfolio beyond Indian markets? US ETFs in India offer an exciting opportunity to tap into the world's largest economy. These exchange-traded funds provide a simple way to invest in a basket of US stocks, giving you exposure to top American companies and sectors.

In this article, you'll discover the top 5 US ETFs you can now invest in from India. We'll explore popular options like the SPDR S&P 500 ETF Trust and the Invesco QQQ Trust, which track major US stock market indexes. You'll learn about their performance, holdings, and why they might be a good fit for your long-term investment strategy. Get ready to expand your investment horizons and potentially boost your returns with these powerful ETF options.

What are ETFs?

Exchange-traded funds (ETFs) are investment vehicles that offer you a simple way to invest in a basket of assets. They combine features of mutual funds and stocks, providing a unique opportunity to diversify your portfolio. ETFs track specific indexes, sectors, or commodities, allowing you to gain exposure to a wide range of securities with a single investment.

When you invest in an ETF, you're essentially buying shares in a fund that holds a collection of assets. These assets can include stocks, bonds, or other securities. The fund aims to replicate the performance of a particular index or sector, such as the S&P 500 or the technology industry. This approach allows you to invest in a broad market segment without having to purchase individual stocks.

Benefits of investing in EFTs

• Cost-Effectiveness: ETFs often have lower expense ratios than actively managed mutual funds since they are usually passively managed to track an index, reducing management costs and boosting long-term investment returns.
• Transparency: An ETF's holdings are easily visible, providing clear insight into what you're investing in. This supports more informed investment decisions and better alignment with financial goals.
• Tax Efficiency: ETFs typically generate fewer capital gains distributions due to their structural and management efficiencies, offering a tax-advantaged investment option, particularly in taxable accounts.

As you consider adding US ETFs to your investment strategy, it's important to understand that they provide an opportunity to gain exposure to the American market from India. This can help you diversify your portfolio geographically and potentially benefit from the growth of the world's largest economy.

Top 5 EFTs to invest in

SPDR S&P 500 ETF Trust (SPY)

SPY overview

The SPDR S&P 500 ETF Trust, commonly known as SPY, is a popular ETF US market fund that tracks the performance of the S&P 500 index. Launched in January 1993, SPY was the first ETF listed in the United States, making it a pioneer in the world of exchange-traded funds. This ETF offers investors an opportunity to gain exposure to the 500 largest publicly traded companies in the U.S. market, providing a simple way to diversify your portfolio across various sectors.

SPY performance and returns

SPY has consistently delivered strong ETF performance over the years, mirroring the growth of the U.S. economy. As of August 31, 2024, the fund's year-to-date return was 19.43%, with a 3-year annualized return of 9.25% and a 5-year annualized return of 15.76%. These figures demonstrate the potential for long-term growth when investing in US market ETF options from India.

SPY expense ratio and trading

One of the key advantages of SPY is its low expense ratio of 0.0945%. This means that for every INR 837,657.04 invested, you would pay only INR 791.59 in annual fees. The fund's low costs make it an attractive option for both short-term traders and long-term investors looking to build wealth over time.

SPY is known for its high liquidity, with an average daily trading volume of approximately 80 million shares. This liquidity ensures that you can easily buy or sell shares without significantly impacting the price, making it an ideal choice for active traders and those seeking to implement various ETF trading strategies.

Invesco QQQ Trust (QQQ)

QQQ overview

The Invesco QQQ Trust, commonly known as QQQ, is a popular ETF US market fund that tracks the Nasdaq-100 Index. Launched in March 1999, QQQ offers investors exposure to 101 of the largest non-financial companies listed on the Nasdaq stock market. This ETF is often viewed as a gage of the technology sector's performance due to its heavy weighting towards large-cap tech companies like Apple, Microsoft, and Alphabet.

QQQ performance and returns

QQQ has demonstrated impressive ETF performance over the years, typically outperforming broad equity benchmarks like the S&P 500. As of June 30, 2024, QQQ's 10-year NAV performance reflected an 18.65% growth compared to 12.83% for the S&P 500. The ETF has beaten the S&P 500 eight out of the last 10 years as of June 30, 2024. This consistent outperformance has made QQQ an attractive option for investors looking to gain exposure to innovative companies and potentially boost their portfolio returns.

QQQ expense ratio and trading

QQQ boasts a relatively low expense ratio of 0.20%, making it a cost-effective investment option. This low fee structure can have a significant impact on long-term returns, especially when compared to actively managed funds. QQQ is also known for its high liquidity, ranking as the 2nd most-traded ETF in the US based on average daily volume traded as of June 30, 2024. This liquidity ensures that investors can easily buy or sell shares without significantly impacting the price.

QQQ's portfolio is heavily weighted towards the technology sector, which accounts for 49.56% of its total sector allocation. This concentration in tech stocks provides investors with exposure to companies that are constantly developing new technologies, offering the potential for long-term growth and innovation exposure. However, it's important to note that this focus on tech can also lead to higher volatility compared to more diversified ETFs.

iShares Core S&P 500 ETF (IVV)

IVV overview

The iShares Core S&P 500 ETF (IVV) is a popular exchange-traded fund that offers investors exposure to the large-cap sector of the U.S. equity market. This ETF tracks the performance of the S&P 500 index, which consists of 500 leading companies and covers approximately 80% of the available market capitalization in the United States. IVV provides a cost-effective way to gain diversified exposure to some of the largest and most influential companies in the U.S. stock market.

IVV performance and returns

IVV has demonstrated strong performance over the years, making it an attractive option for investors looking to add US ETFs to their portfolios. As of August 2024, the fund has delivered a compound annual return of 8.36% over the analyzed timeframe, with a standard deviation of 15.20%. This performance highlights the potential for long-term growth when investing in US ETFs from India.

The fund's recent performance has been particularly impressive. As of September 2024, IVV's year-to-date return stood at 21.04%, while its 1-year and 3-year returns were 34.28% and 10.41%, respectively. These figures underscore the fund's ability to generate solid returns for investors seeking exposure to the U.S. stock market.

IVV expense ratio and trading

One of the key advantages of IVV is its extremely low expense ratio of 0.03%. This ultra-low fee structure gives the fund a long-term performance advantage over many of its category counterparts. The low costs associated with IVV can have a significant impact on your investment returns over time, making it an attractive option for both short-term traders and long-term investors.

IVV is known for its high liquidity, with an average daily trading volume of approximately 4,190,526 shares. This liquidity ensures that you can easily buy or sell shares without significantly impacting the price, making it an ideal choice for implementing various investment strategies.

As of September 2024, IVV had net assets of $521.63 billion, reflecting its popularity among investors. The fund's large asset base contributes to its stability and ability to closely track the performance of the S&P 500 index.

Vanguard Total Stock Market ETF (VTI)

VTI overview

The Vanguard Total Stock Market ETF (VTI) is a popular exchange-traded fund that offers investors broad exposure to the entire U.S. equity market. This ETF tracks the performance of the CRSP U.S. Total Market Index, which includes small-, mid-, and large-cap stocks. VTI employs a passive investment approach and uses an index-sampling strategy to hold a broadly diversified collection of securities that approximates the full index in terms of key characteristics.

VTI performance and returns

VTI has demonstrated impressive performance over the years, making it an attractive option for investors looking to add US ETFs to their portfolios. As of August 2024, the fund has delivered a compound annual return of 10.53% over the past 30 years, with a standard deviation of 15.55%. This performance highlights the potential for long-term growth when investing in US ETFs from India.

The fund's recent performance has been particularly strong. As of February 2024, VTI had a one-year return of 19.2% and a five-year return of 13.4%. These figures underscore the fund's ability to generate solid returns for investors seeking exposure to the U.S. stock market.

VTI expense ratio and trading

One of the key advantages of VTI is its extremely low expense ratio of 0.03%. This ultra-low fee structure gives the fund a long-term performance advantage over many of its category counterparts. The low costs associated with VTI can have a significant impact on your investment returns over time, making it an attractive option for both short-term traders and long-term investors.

VTI is known for its high liquidity, with an average daily trading volume of approximately 2.4 million shares. This liquidity ensures that you can easily buy or sell shares without significantly impacting the price, making it an ideal choice for implementing various investment strategies.

For investors seeking diversification, VTI offers exposure to over 3,700 stocks, with its top sector being technology at a 27.7% weighting. The fund also pays a quarterly dividend, with an annual dividend yield of 1.80% as of 2023.

Vanguard S&P 500 ETF (VOO)

VOO overview

The Vanguard S&P 500 ETF (VOO) is a popular exchange-traded fund that tracks the performance of the S&P 500 index. This ETF provides investors with broad exposure to the U.S. equity market, focusing on the 500 largest publicly traded companies in the United States. VOO employs an indexing investment approach designed to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.

VOO performance and returns

VOO has demonstrated impressive performance over the years, making it an attractive option for investors looking to add US ETFs to their portfolios. As of August 2024, the fund has delivered a compound annual return of 10.58% over the past 30 years, with a standard deviation of 15.12%. This performance highlights the potential for long-term growth when investing in US ETFs from India.

The fund's recent performance has been particularly strong. As of mid-2024, VOO's 1-year return stood at 22.41%, while its 3-year and 5-year returns were 7.99% and 13.14%, respectively. These figures underscore the fund's ability to generate solid returns for investors seeking exposure to the U.S. stock market.

VOO expense ratio and trading

One of the key advantages of VOO is its ultra-low expense ratio of 0.03%. This low fee structure gives the fund a long-term performance advantage over many of its category counterparts. For example, the management fees charged by Vanguard on a INR 837,657.04 investment in the Vanguard S&P 500 ETF would be only INR 251.30 per year.

VOO is known for its high liquidity, making it an ideal choice for implementing various investment strategies. As of mid-2024, the fund had over INR 36,019.25 billion in assets under management (AUM), ranking it as the third-biggest ETF. This large asset base contributes to its stability and ability to closely track the performance of the S&P 500 index.

For investors seeking portfolio diversification and exposure to the U.S. stock market, the Vanguard S&P 500 ETF offers a cost-effective and reliable option. Its low expense ratio, strong performance history, and broad market exposure make it one of the best US ETFs available to Indian investors looking to diversify their portfolios and potentially boost their long-term returns.

Investing in US ETFs from India offers a powerful way to diversify your portfolio and tap into the growth potential of the world's largest economy. The top 5 ETFs discussed - SPY, QQQ, IVV, VTI, and VOO - provide exposure to different segments of the US market, from broad-based indexes to tech-focused funds. Each has its own strengths, whether it's ultra-low fees, high liquidity, or strong historical performance.

As you consider adding these ETFs to your investment strategy, remember to weigh factors like your risk tolerance, investment goals, and overall portfolio allocation. While US ETFs can boost returns and spread risk, it's crucial to understand the potential volatility and currency risks involved. By carefully selecting the right mix of ETFs, you can build a robust, globally diversified portfolio that aligns with your financial objectives and potentially enhances your long-term wealth creation.