5 Best ETF Stocks to Invest in December 2021

ETF investing has become very popular and total ETF assets are now around $7 trillion. US ETFs saw inflows of $76.9 billion in October, which made it the third biggest month of the year in terms of inflows.

Now, while choosing the best ETF there are several aspects that you should consider. Firstly, the ETF investing strategy should align with your investment needs. Once you have finalized the investing strategy you can then choose the best fund in that category by looking at the asset size, liquidity, and expense ratio. Here are the five best ETFs that you can buy in December 2021.

1. Vanguard S&P 500 ETF (NYSE: VOO)

If you are an equity investor, an S&P 500 ETF should be a core part of your portfolio. Berkshire Hathaway chairman Warren Buffett has been advocating investing in S&P 500 index funds due to their lower cost. At last year’s annual shareholder meeting he said “I don’t think most people are in a position to pick single stocks; a few may be, but on balance, I think people are much better off buying a cross section of America and just forgetting about it.” He was referring to the S&P 500 as a cross-section of America. Berkshire Hathaway, which has otherwise been struggling to find good investment opportunities, has also invested some funds in S&P 500 ETFs.

VOO has a low expense ratio

VOO has a low expense ratio of 3 basis points annually. While S&P 500 S&P 500 ETF is the most popular and liquid ETF tracking the S&P 500, its annual expense ratio is around thrice of VOO. If you are looking to hold VOO for long, the small difference in expense ratio could make a significant difference.

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2. VanEck Vectors Gold Miners ETF (GDX)

The outlook for gold looks positive looking at the current geopolitical environment. Gold is a good hedge against inflation which is currently running at multi-year highs. While the expected increase in interest rates is a negative for non-interest bearing assets like gold, it might be prudent to allocate some funds towards gold.

There are several ways to invest in gold. GDX, which invests in gold mining companies, is a leveraged play on gold prices. This basically means that its price rises or falls more than the movement in gold prices. The ETF has assets of around $14 billion with a gross expense ratio of 0.51%. It invests in gold companies across the world. However, it is overweight on Canadian gold companies and they account for around half of the portfolio.

Overall, GDX looks like a good ETF to buy in December. While the ETF has underperformed in 2021 and is down sharply from its peaks, it can be a good way to diversify your portfolio.

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3. iShares Core High Dividend ETF (NYSE: HDV)

If you are an investor who craves high dividends, HDV will fit the bill. Currently, the S&P 500’s dividend yield is running near multi-year lows due to several factors. These include the inclusion of Tesla, dividends cuts by S&P constituents, and the steep rise in the index without a commensurate increase in dividends. However, HDV will give you exposure to high dividend stocks.

HDV is a good bet for dividend investors

The ETF has a trailing 12 months yield of 3.4% and the portfolio is well diversified with 75 stocks. The healthcare sector is the largest holding for the fund with an allocation of around 20%. Energy and consumer staples sectors are the second and third sectors with a weightage of 18.7% and 16.5% respectively. The ETF can be part of those investors’ portfolios who want to build a diversified portfolio of stocks that pay good dividends.

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4. The Global X Blockchain ETF (NYSE: BKCH)

The blockchain sector is an emerging industry and some investors might not be too well versed with the different companies in the industry. If you want to build a portfolio of blockchain stocks without having to worry about selecting and buying individual stocks, you can consider an ETF.

BKCH is a play on blockchain

BKCH has assets of just above $121 million and has an annual expense ratio of 0.50%. The ETF has 25 stocks and “seeks to invest in companies positioned to benefit from the increased adoption of blockchain technology, including companies in digital asset mining, blockchain & digital asset transactions, blockchain applications, blockchain & digital asset hardware, and blockchain & digital asset integration.”

Currently, Riot Blockchain is the biggest holding for the ETF with a 13.2% weight in the portfolio. Coinbase and Marathon Digital are the second and third holding with a weight of 11.4% and 10.6% respectively.

Investing in blockchain stocks can especially be perplexing for many investors as not many have a good understanding of the sector. For such investors, BKCH looks like a good way to get diversified exposure to blockchain stocks.

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5. ARK Fintech Innovation ETF (NYSE: ARKF)

The fintech sector is among the most promising investing themes for the next decade. Over the last year, many new fintech companies like SoFi, Affirm, Root Insurance, and Robinhood have gone public. If you are looking at getting diversified exposure to the fintech sector, ARKF looks like a good bet. The ETF is run by Cathie Wood who has built her reputation on Wall Street as someone who identifies disruptors early. Wood was among the early investors of Tesla and Square. She expects Tesla stock to nearly triple by 2025 and holds the stock in several of the funds.

ARKF is a good bet for growth investors

Wood is known for her growth investing and ARKF is a good way to play the massive growth that the fintech industry is expected to witness. The ETF has an expense ratio of 75 basis points which may seem high. However, ARK funds have a higher expense ratio also being an actively managed ETF, ARKF can be expected to have a high expense ratio.

Currently, Square is the largest holding for the ETF followed by Coinbase. Wood has also been buying Robinhood shares amid the fall.

Overall, ETFs can be a good investing strategy especially for investors who lack the time or analytical skills to pick individual stocks. Their low expense ratio makes them an attractive investment option.

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