Best US ETFs

1. iShares NASDAQ 100 UCITS ETF (ISVAF)

The Nasdaq stock market is one of the world’s leading clusters of high-tech growth stocks. iShares’ Nasdaq 100 ETF fund gives you broad-based exposure to companies in influential tech sectors, including software, hardware, biotechnology, and telecommunications. The ETF tracks the general performance of all the so-called “non-financial” individual stocks within the Nasdaq.

Since the fund’s inception in January 2010, if you had invested £1,000, it would now be worth approximately £8,000, representing a seven-fold return on investment in just over a decade.

The ETF enjoyed an impressive 2020 despite the advent of the COVID-19 pandemic, posting huge gains in the latter half of 2020. Although the ETF shed some of those gains in 2021 and 2022, the fund is up over 22% year to date.

Almost half of the iShares Nasdaq 100 ETF’s exposure (48.78%) is attributed to the ‘Information Technology’ sector, with the remaining exposure spread across ‘Communication’, ‘Consumer’, ‘Healthcare,”’ and ‘Industrials’.

• Fund size: £7.404 billion
• Annual charges: 0.33%
• Dividend yield: 0.28%
• Best suited to: Retail investors looking to get access to some of the high-growth individual stocks in US tech with a single investment or trade. It’s also considered more suitable for those with a higher risk-reward tolerance.

2. Vanguard S&P 500 UCITS ETF (VGFPF)

The Vanguard S&P 500 ETF gives you direct access to the biggest US-listed companies in a single fund. The fund tracks the benchmark performance of the Standard and Poor’s 500 index. Vanguard invests in the same securities listed in the S&P 500 at the same proportions, with the aim of replicating the same returns. Dividends are offered to investors and are currently paid quarterly.

This index is market cap-weighted, meaning you’ll get greater exposure to the most valuable equities than those with smaller market caps. That’s unlike the Vanguard Dividend Appreciation ETF, which is unavailable as a UCITS fund and focuses solely on companies that are growing their dividend yields year-on-year.

Since the fund’s inception in May 2012, investors have made a return of 276.73%. According to Vanguard’s prospectus for this ETF, the ETF has somehow managed to outperform the benchmark S&P 500, with a 205.26% return in the last ten years. That’s compared with 198.53% if you had invested directly in the S&P 500 index. This alone makes it one of the best Vanguard ETFs today.

• Fund size: £23.85 billion
• Annual charges: 0.07%
• Dividend yield: 1.35%
• Best suited to: Anyone looking for a cost-effective investment in the wider US economy. With ongoing charges of just 0.07% of your investment and minimum investments of £500 upfront and £100 a month, it’s a solid low cost option for those looking to add exposure to the S&P 500 to their Stocks and Shares ISA.

3. iShares Edge MSCI USA Quality Factor UCITS ETF (IUQFF)

The iShares Edge MSCI USA Quality Factor UTF looks to replicate the performance of an index comprising a host of MSCI USA-listed equities that are notorious for delivering robust and consistent earnings. In the year to date, this US ETF has returned almost 10%, despite the backdrop of stubborn inflation.

Such equities involved in this US ETF include Home Depot Inc., Meta, Microsoft, Nvidia, Costco Wholesale Corp., and Coca-Cola. Although these are some of America’s most established publicly listed companies, this doesn’t mean they are immune from the effects of the wider economy.

The fund was down just over 20% in 2022 after many companies lost value amid rampant inflation. That’s been the main outlier since the fund’s inception in October 2016.

With its total expense ratio amounting to just 0.20%, that’s a low cost for a US ETF that’s diversified across America’s leading industries.

• Fund size: £1.489 billion
• Annual charges: 0.20%
• Dividend yield: 1.21%
• Best suited to: Any retail investor looking to spread their risk when investing in the US economy. This ETF covers IT, financial services, healthcare, communications, industrials, consumer, energy, real estate, and more.

4. iShares MSCI USA UCITS ETF (ISMCF)

Instead of focusing on US equities on a stock market index that delivers consistent earnings, the iShares MSCI USA UCITS ETF contains a basket of US companies from across the spectrum. You’ll get cost-effective investment in some of the biggest US companies as well as some of the country’s up-and-coming commercial prospects.

Launched in January 2010, this ETF is one of the most established funds, with the ability to invest in the UCITS version through UK-regulated brokers.

At a cost of 0.07% per year, its annual charges are very competitive for a fund that tracks some of the biggest names in US commerce. In the last decade, this fund has only made an annual loss twice.

This ETF covers a solid base of sectors in the US, including IT, healthcare, financial services, consumer discretionary, and industrials. Since its inception, the fund has delivered a four-fold return on investment.

• Fund size: £348.943 million
• Annual charges: 0.07%
• Dividend yield: 1.48%
• Best suited to: Retail investors seeking a cost-effective US-focused ETF, with exceptionally low annual charges and exposure to a wide range of sectors.

5. SPDR S&P US Industrials Select Sector UCITS ETF (SXLB.L)

This US ETF focuses on the biggest US-listed industrial companies operating within the S&P 500 index. Essentially, this fund invests directly in the American industrial sector, with securities listed in the fund weighted by their market capitalisation. This ensures you get the most exposure to the biggest and most valuable behemoths in the industry.

Industrial sector ETFs like these typically feature equities from aerospace, defence, machinery, air freight, electrical equipment, building products, ground transportation, and many more. The most valuable companies within this fund are Raytheon Technologies Corp., Honeywell International Inc., United Parcel Service, Union Pacific Corp., and Boeing Co.

SPDR considers this ETF to be at the riskier end of its risk-reward profile. That’s largely because the companies listed in this fund are at the mercy of commodity prices. As of April 2023, this ETF had a four-star Morningstar rating.

• Fund size: £152.72 million
• Annual charges: 0.15%
• Dividend yield: 0%
• Best suited to: Retail investors with a strong belief that the US industrial sector can overcome the current inflationary issues and continue to prosper.

6. SPDR S&P US Energy Select Sector UCITS ETF (SXLE.L)

Like so many other developed countries, the US is working hard to improve its green credentials. Therefore, the renewable energy market is one of its most fascinating industries for growth stocks.

This ETF tracks the commercial performance of the biggest US-listed energy firms within the S&P 500 stock market index. These equities are classified as operating within the US energy sector by the Global Industry Classification Standard (GICS).

This fund was launched in July 2015 and has delivered a 54.78% return on investment, even better than the index returns of the S&P Energy Select Sector Daily Capped 25/20 index over the same timeframe.

Some of the most notable names you can invest in with this fund include Exxon Mobil Corp., Chevron Corp., Marathon Petroleum Corp., and Pioneer Natural Resources Co.

According to SPDR, the weighting for this ETF is 91.52% in favour of companies specialising in oil, gas, and consumable fuels. The remaining 8.48% comprises companies specialising in energy equipment and services.

• Fund size: £415.167 million
• Annual charges: 0.15%
• Dividend yield: 1.74%
• Best suited to: Those looking to take advantage of rising energy prices and investment in renewable energy, one of the world’s most influential emerging markets. Dividends with this ETF surpass the average dividend yield for the S&P 500 index, which sits at around 1.4%.

7. iShares 1-3 Year Treasury Bond UCITS ETF (SHY)

The iShares 1-3 Year Treasury Bond ETF provides you with instant exposure to short-term US Treasury bonds. The fund aligns with the performance of an index consisting of 1-3-year government bonds issued by the Treasury.

This bond ETF was established in June 2006 and has been a relatively steady, but modest, grower in the last 17 years. It has yielded returns in eight of the last ten years, and this fund sits at the lower end of the risk-reward profile.

Between 2006 and 2023, this bond ETF has delivered a 31.93% return on investment, which sits very close to the benchmark percentage return of short-term US government bonds.

So far in 2023, this has delivered a 2.13% return. US government bonds have risen of late due to the impact of inflation and rising interest rates in response.

Treasury bonds return a fixed rate to investors, which ensures a consistent income stream. This can be a sensible and relatively safe route for those looking to supplement their income or save for retirement.

• Fund size: £8.071 billion
• Annual charges: 0.15%
• Dividend yield: 1.77%
• Best suited to: Investors looking to generate a steady income stream with a relatively low cost expense ratio. US treasury bonds are one of the safest bond investments as they are backed by the credit of the US government.

8. Legal & General US Equity UCITS ETF (LGUG.L)

The Legal & General US Equity ETF tracks the benchmark performance of the United States Large & Mid Cap index of Solactive Core. This market cap weighted index includes some of the most in-demand large and mid-cap corporations in the US economy. The ETF includes all 554 equities listed within the index and aims to replicate its returns as accurately as possible.

This fund provider offers instant exposure to a diverse range of innovative US corporations across a host of sectors. Listed in November 2018, this ETF has posted a return of 59.02% since its inception, which is surprisingly 1.60% above the Solactive Core US Large & Mid Cap index benchmark.

If you’re keen to add US-based exposure to your investment portfolio but don’t know which individual stocks to select, this ETF is a low-cost way to get involved. With an ultra-low expense ratio of just 0.05%, there are few cheaper methods to invest in the US’s best ETFs.

• Fund size: £416 million
• Annual charges: 0.05%
• Dividend yield: 0.89%
• Best suited to: Retail investors wanting to buy shares in some of America’s biggest and most forward-thinking companies. Those looking to invest for more than five years are also the target demographic, according to Legal & General’s factsheet.

9. iShares Dow Jones Industrial Average UCITS ETF (IDOWF)

The iShares Dow Jones Industrial Average ETF is a direct investment in 30 of the biggest industrial corporations in the US. This fund aims to replicate the performance of the Dow Jones Industrial Average, which includes the most valuable US-listed industrial firms, excluding those in the utilities and transport sectors.

Launched in January 2010, the iShares Dow Jones Industrial Average ETF has more than quadrupled the investments of those who first bought into the fund. It has posted just three negative years in the last decade, one of which was just -0.5%.

It posted its biggest loss of -7.4% in 2022, at the height of America’s recent inflation problems. Even so, the Dow Jones Industrial Average has a history of surpassing long-term returns in other asset classes. It’s also important to note that this exchange-traded fund pays quarterly dividends in the same fashion as the DJIA index.

• Fund size: £726.603 million
• Annual charges: 0.33%
• Dividend yield: 1.74%
• Best suited to: Retail investors seeking broad based exposure to America’s biggest brands, ranging from Microsoft to McDonald’s – and are prepared to pay a higher expense ratio to get it.

10. iShares S&P SmallCap 600 UCITS ETF (IDP6.L)

For those who prefer to get involved in some of the lesser-known US equities with smaller market caps, iShares’ S&P SmallCap 600 ETF is a great opportunity. Replicating the performance of the S&P SmallCap 600 index, this fund diversifies your exposure to some of the fastest-growing and most innovative brands in the US economy today.

Since its inception in May 2008, the fund has gone from strength to strength. It more than doubled in value following the immediate shock of the COVID-19 pandemic, and despite a rocky 2022 caused by sluggish economic growth and escalating inflation, it still generated an all-time return of 245.16% and 53% in the last three years alone.

It’s one of the most expensive US ETFs listed in this article, carrying annual charges of 0.40%. However, given its track record and the diversification of assets within the fund, it’s an expense ratio worth taking.

• Fund size: £751.411 million
• Annual charges: 0.40%
• Dividend yield: 1.08%
• Best suited to: Retail investors looking to invest in companies that still have plenty of upside potential. Many of these small-cap firms have the capability to become large-cap equities on the stock market, helping to grow this ETF for the long term.