Best US Stock ETFs Recommendations: Stop Knowing Only VOO! This Is the Smart Way to Choose

Image Source: pexels

Instead of looking for the “best” ETF, ask which ETF is “most suitable for me.” The starting point of this US stock ETF recommendation list is yourself.

As of October 2025, total US ETF assets reached 13.1 trillion USD. Facing such a huge selection, you don’t need to feel anxious. Please take a moment to honestly answer the following three key questions:

1. What is your investment goal? (Pursuing rapid asset growth, or stable cash flow?)
2. How much market volatility can you tolerate? (Would you panic sell if stock prices drop 20%?)
3. How long is your investment horizon? (Do you plan to use this money within 5 years, or more than 10 years?)

Key Takeaways

• Before choosing an ETF, first clarify your investment goals, risk tolerance, and investment horizon.
• Core holdings should start with low-cost broad market ETFs, such as VTI or VOO.
• Satellite allocations can increase cash flow or pursue excess returns, but with higher risk.
• When selecting ETFs, expense ratio and tracking error are important considerations.
• Asset allocation determines most investment returns, more important than picking a single ETF.

Step One: Build Core Holdings, Starting with Broad Market ETFs

Image Source: pexels

After answering the three questions at the beginning, we can start building your portfolio. A skyscraper rises from the ground; a solid portfolio usually begins with “core holdings.” Core holdings are the cornerstone of your portfolio, with the highest allocation, aiming to follow steady overall market growth. “Broad market index ETFs” are the best choice for core holdings.

How to Choose Broad Market ETFs? S&P 500 vs. Total Market

Many people’s first thought of a US stock ETF is VOO, which tracks the S&P 500 index. The S&P 500 index represents the top 500 US listed companies and is indeed a market benchmark. But besides it, you have another excellent option: ETFs tracking the entire US market, such as VTI.

What’s the difference between the two? Simply put, it’s the degree of diversification.

• S&P 500 ETFs (such as VOO, IVV): Focus on about 500 large blue-chip stocks.
• Total Market ETFs (such as VTI, ITOT): Cover more than 3,500 companies, including large, mid, and small-cap stocks.

From the table below, you can see that although the top holdings of both are similar, the weights differ. VTI has more dispersed holdings, so the influence of a single company is slightly smaller.

How to Choose?

• If you strongly believe in the leadership of the top 500 US companies and want to closely follow the market mainstream, VOO or IVV are good choices.
• If you pursue ultimate diversification and want to capture every growth opportunity in the market (including potentially rising mid/small-cap companies in the future), then VTI or ITOT will be more suitable for you.

Tech Leaders: Nasdaq-100 Index ETFs

If your risk tolerance is higher and you are bullish on tech stock growth potential, then ETFs tracking the Nasdaq-100 index, such as QQQ, can be part of core holdings. This index includes the top 100 non-financial companies listed on Nasdaq, gathering tech giants.

However, you may have heard of its “mini version” sibling QQQM. These two track exactly the same index with identical holdings; the biggest difference is fees.

• QQQ: Expense ratio 0.20%, extremely high trading volume, suitable for frequent traders.
• QQQM: Expense ratio 0.15%, more suitable for long-term holders.

For most retail investors or long-term investors, choosing the lower-fee QQQM is the smarter decision.

Expense Ratio and Tracking Error: The Devil Is in the Details

When selecting ETFs, the expense ratio is an extremely important indicator. It is like the management fee the fund company charges you annually. The 0.05% fee difference between QQQ and QQQM mentioned earlier seems negligible, but over long periods, the compounding effect significantly impacts your final returns.

Another detail to watch is “tracking error.”

You can think of an ETF as a master imitator; its task is to imitate the performance of a specific index (such as S&P 500). Tracking error measures how “similar” its imitation is. The smaller the error, the closer the ETF’s performance is to its tracked index, better achieving your investment expectations.

In summary, when choosing core holdings, prioritize ETFs with low expense ratios and small tracking errors. This ensures your long-term investment costs are minimized and you precisely participate in market growth.

Step Two: Use Satellite Allocations to Strengthen Your Portfolio

Image Source: pexels

After building solid core holdings, the next step is to use “satellite allocations” to strengthen your portfolio. Satellite allocations usually have lower weights, aiming to achieve specific goals, such as increasing cash flow, pursuing excess returns, or balancing risk.

Increase Cash Flow: High Dividend vs. Dividend Growth ETFs

If your investment goal includes creating stable passive income, dividend ETFs are excellent satellite options. You can choose from two main strategies:

• High Dividend ETFs (such as SCHD) : These ETFs focus on selecting companies with the highest current dividend yields, aiming to provide immediate and higher cash flow.
• Dividend Growth ETFs (such as DGRO, VIG) : These ETFs seek companies capable of and consistently raising dividends. Their current yields may be low, but long-term, your cash flow has potential to grow continuously.

How to Choose?

If you are nearing retirement or need immediate cash income, SCHD’s high yield is more attractive. If you are young with a long investment horizon, choosing DGRO or VIG to let dividends grow with your assets is a wiser strategy.

Pursue Excess Returns: Factor and Sector ETFs

If your risk tolerance is higher, consider allocating some funds to factor or sector ETFs to pursue returns exceeding the broad market.

• Factor ETFs: These ETFs focus on specific styles of stocks, such as VUG (growth) focusing on high-growth potential companies, while VTV (value) targets undervalued stocks. Historical data shows different factors perform differently in various market environments.
• Sector ETFs: These ETFs allow concentrated investment in specific sectors, such as XLK (technology) or XLV (healthcare). This strategy has extremely high risk because your returns depend entirely on a single sector’s performance. As shown below, just XLK ETF has its top three holdings accounting for nearly 40% weight, very concentrated.

Layout the Future: How to Evaluate Thematic ETFs

Thematic ETFs invest in future megatrends, such as artificial intelligence (AI), clean energy, or gene technology. They are full of imagination but also come with extremely high uncertainty and volatility. Before investing, evaluate with a simple framework:

1. Trend Authenticity: Is this trend real and sustainable? For AI, the market is expected to grow from 390.9 billion USD in 2025 to nearly 3.5 trillion USD by 2033, showing strong growth potential.
2. Holding Concentration: Is the ETF overly concentrated in a few companies? For AI-themed BOTZ, its top ten holdings account for over 60% of assets.
3. Expense Ratio: Thematic ETFs usually have higher fees. For example, BOTZ has an expense ratio of 0.68%, far higher than broad market ETFs.

Note: Thematic ETFs have huge volatility, only suitable for speculative allocation with a small portion of your portfolio (e.g., less than 5%).

Balance Risk: Indispensable Bond ETFs

Adding bond ETFs to your portfolio is like buying insurance for your assets. Traditionally, when stocks fall, funds flow to relatively safe bonds, pushing bond prices up, balancing risk.

You can consider BND (US total bond market) ETF, which widely holds various types of US bonds.

However, you need to understand this hedging effect is not always effective. In recent high-inflation environments, stocks and bonds falling together has become more frequent, with their correlation reaching a 40-year high. Nevertheless, long-term, bonds still play an indispensable role in reducing overall portfolio volatility.

Practical Portfolios: Your Exclusive US Stock ETF Recommendation List

After mastering theoretical knowledge, now let’s enter the most exciting part: building a portfolio exclusive to you. Before starting, prepare trading tools. Besides choosing a suitable broker, how to conveniently and low-cost invest funds is also key. You can research platforms like Biyapay supporting multiple deposit methods to smoothly complete from fund preparation to buying ETFs.

Below are two portfolio examples with different goals; use them as starting points and adjust based on your situation. This US stock ETF recommendation list will be your practical manual.

Example One: Steady Growth Portfolio

This portfolio is designed for young investors or beginners. Your investment horizon is long (over 10 years), risk tolerance higher, main goal is long-term capital appreciation.

Suggested Allocation:

• 70% VTI (US Total Market ETF)
• 20% QQQM (Nasdaq-100 Index ETF)
• 10% DGRO (Dividend Growth ETF)

Portfolio Logic:

• VTI (70%): As the absolute core, letting you widely hold over 3,500 US companies, follow steady market growth, laying a solid foundation.
• QQQM (20%): This is your “growth accelerator.” By allocating to tech giants, you capture high growth potential from tech innovation, but also increase portfolio volatility.
• DGRO (10%): This is a future-oriented allocation. It invests in companies that not only pay dividends but can continuously raise them. This provides another boost to asset appreciation and creates continuously growing cash flow in the future.

This portfolio’s core idea is: broad market as cornerstone, tech stocks to enhance growth momentum, dividend growth strategy as icing on the cake. It is an active strategy focused on long-term asset accumulation.

Example Two: Stable Income Portfolio

This portfolio suits those preparing for or already retired, hoping to create stable cash flow for living expenses. Your main goals are capital preservation and reliable passive income, with lower risk tolerance.

Suggested Allocation:

• 50% VTI (US Total Market ETF)
• 30% SCHD (High Dividend ETF)
• 20% BND (Total Bond Market ETF)

Portfolio Logic:

This portfolio’s design essence is “balance.” It simultaneously pursues price stability, cash flow, and risk control. Let’s look at this portfolio’s cash flow potential with a specific example. Assuming you invest 100,000 USD, based on current dividend yields, annual income is estimated as follows:

From the table, SCHD is this portfolio’s main cash flow source. VTI continues providing market growth potential. The most important part is BND; this 20% bond allocation acts as a stabilizer during stock market turbulence, reducing overall portfolio volatility, letting you sleep more peacefully. This is the value of an excellent US stock ETF recommendation portfolio.

Build Your ETF Screening Checklist

The above examples are good starting points, but the smartest investors learn to screen themselves. You can use powerful free websites like ETF.com and Morningstar to research and compare different ETFs.

Especially Morningstar’s “Star Rating”, it is a practical indicator measuring ETF past risk-adjusted returns. Ratings range from one to five stars; higher star ETFs perform better among peers.

• Top 10% funds get five stars
• Next 22.5% get four stars
• Middle 35% get three stars
• Next 22.5% get two stars
• Bottom 10% get one star

When starting research, build your own screening checklist. Many tool websites even allow downloading screening results as .csv files for offline analysis. This US stock ETF recommendation list will help you stay disciplined and avoid impulsive decisions.

You can use the table below as your personal checklist template:

The ultimate purpose of this US stock ETF recommendation guide is to guide you from “asking others what to buy” to “asking yourself what suits me.” Successful investing begins with deep self-understanding, not blindly chasing market hotspots.

Remember, research shows asset allocation determines over 90% of investment returns. This means how you combine assets is far more important than picking a single star ETF.

To build the most suitable portfolio for you, follow these three major steps:

1. Establish Core Holdings: Start with low-cost broad market ETFs like VTI or VOO to lay a solid foundation.
2. Allocate Satellite ETFs: Based on your goals (increase cash flow or pursue growth), add satellite positions like SCHD or QQQM.
3. Build and Review: Use the checklist to create your watchlist and regularly review your asset allocation to ensure it always matches your financial planning.

Start now! Begin building your personalized portfolio and take the first step in smart investing.

FAQ

Still Don’t Know How to Choose Between VOO and VTI?

If you strongly believe in the leadership of the top 500 US companies, choose VOO. If you want more diversification to capture growth opportunities including mid/small-cap companies, VTI is more comprehensive. For most people, long-term performance difference is small.

How Much Money Do I Need to Prepare to Invest in ETFs?

Investing in ETFs has no minimum amount limit. Many brokers support fractional shares; you can even start with 50 USD. The key is developing a habit of continuous investment; amount size is secondary.

Should I Wait for the Market to Drop Before Buying?

Trying to predict market timing is very difficult. The most robust strategy is “dollar-cost averaging,” regularly investing funds. This averages costs and avoids missing long-term market growth while waiting for perfect timing.

Tip: Time in the market is far more important than timing the market.

What to Do After Receiving Dividends?

You can reinvest received dividends to buy more ETF shares. This action generates compounding effect, accelerating your asset growth. Many brokers offer automatic “Dividend Reinvestment Plan” (DRIP) settings.