The exchange-traded fund (ETF) market continues to evolve rapidly. With these pooled investment vehicles, investors today have an enormous choice of options for their wealth-building strategy — whether that is targeting growth, dividend, and value shares, or a mix of all three.
With this in mind, here are three top funds I think savvy share pickers should consider.
Growth
At 8.1%, the Global X Silver Miners ETF (LSE:SILG) has enjoyed average annual price growth since its launch in mid-2022. That’s better than both the FTSE 100 and FTSE 250, and has been driven by a sharp rise in the silver price.
As the name implies, this fund invests in silver producers like Wheaton Precious Metals, Fresnillo, and Pan American Silver. This approach involves greater risk than investing in a price-tracking fund. However, it also opens the door to supersized returns, as miner profits typically grow at a faster rate than metal prices in bull markets.
Can silver continue climbing, though? I think it can, as a multitude of macroeconomic worries (from government deficits and sticky inflation, to thumping trade tariffs) drive demand for safe-haven assets. Silver prices reached new 14-year peaks near $39.20 an ounce just today (14 July).
Dividends
The iShares UK Dividend UCITS ETF (LSE: IUKD) provides targeted investment to 50 of the highest-yielding shares across the Footsie and FTSE 250. Its 12-month trailing yield is 5.4%, a good distance higher than the 3.4% for UK blue-chip shares.
Since the summer of 2020, it’s provided — through a combination of capital gains and passive income — a average annual return of 13.9%. While its narrow focus on British stocks involves greater geographical risk, this hasn’t impacted its ability to generate exceptional shareholder profits in recent years.
In fact, if the recent shift from US to European equities continues, its emphasis on London-listed companies could give returns an extra boost.
Significant holdings here include British American Tobacco, Legal & General, BP, and National Grid shares.
Value
The Xtrackers MSCI World Value ETF (LSE:XDEV) tracks a basket of large and mid-cap companies from across the world. As well as providing solid geographic diversification, it provides exposure to rock-solid blue chips alongside smaller shares that can deliver better-than-average growth.
And as the name implies, it does so with value characteristics in mind. More specifically, it selects shares based on factors including “price-to-book-value (P/B), price-to-forward earnings (P/E), and enterprise value-to-cash flow from operations (EV/CFO)“.
Taking a value approach can deliver market-beating capital gains over time, as high-quality shares with depressed valuations can rebound strongly when market sentiment changes. During the past five years, this ETF has delivered an average annual return of 13.6%.
Major holdings include Cisco Systems, Intel, Pfizer, and HSBC. Be mindful, however, that its high weighting of cyclical shares may cause underperformance during broader economic downturns.
