Best ETFs to Invest in 2025 (USA)

 

Explore the best ETFs to invest in 2025 across key categories (growth, dividend, tech, S&P 500, ESG, small-cap, etc.). We highlight top ETF picks for beginners and experienced investors, share analysts’ projections, and suggest a diversified ETF strategy.

Exchange-traded funds (ETFs) remain a go-to for both new and veteran investors seeking diversification and cost-efficiency. In 2025, experts expect continued growth in the ETF market, driven by megatrends like artificial intelligence (AI), healthcare innovation, and green energy​statestreet.com​statestreet.com. According to AllianceBernstein’s ETF chief Noel Archard, “ETFs thrive when there are expectations of change,” and he projects the U.S. ETF market will exceed $3 trillion in the coming years​statestreet.com. This article highlights top ETF categories – including growth, dividend, technology, S&P 500, ESG, and small-cap – with leading examples in each. We also summarize projections from reputable analysts, compare key metrics (expense, returns, assets, risk), and recommend a diversified ETF strategy for 2025.

Growth ETFs

Growth-oriented ETFs focus on companies expected to deliver above-average revenue and earnings growth. These funds can be more volatile but have outperformed in recent years. For example, from early 2023 through January 2025, U.S. large-cap growth stocks outpaced large-cap value by about 23 percentage points​morningstar.ca. Morningstar analysts highlight several growth ETFs for 2025, each with a strong “growth” profile and solid track record​morningstar.ca:

• Vanguard International Dividend Appreciation ETF (VIGI) – A dividend-growth-style ETF that targets quality companies overseas. It holds foreign large- and mid-cap stocks with 7+ years of rising dividends, then excludes the highest-yield names to favor stable growers​morningstar.ca. VIGI has an ultra-low fee (0.10%) and has shown low volatility while outperforming its category peers​morningstar.ca. Morningstar notes VIGI “is among the least-volatile funds in its category, yet it has outperformed its average peer” and expects it to continue delivering strong risk-adjusted results​morningstar.ca.
• T. Rowe Price Blue Chip Growth ETF (TCHP) – An actively managed U.S. large-cap growth fund (non-transparent ETF). It invests in blue-chip “stay-at-home” and high-growth companies. Today it’s heavily weighted in the “Magnificent Seven” tech leaders (e.g. Nvidia, Microsoft, Apple), but its managers also seek smaller growth stories. The fund has been very volatile, but the underlying T. Rowe Price growth strategy returned over 16% per year (annualized) over 15 years​morningstar.ca. Morningstar gives TCHP a Silver rating, noting its deep research team and strong historical performance.
• Neuberger Berman Small-Mid Cap ETF (NBSM) – A small/mid-cap blend ETF focusing on profitable, quality companies at modest valuations. Managed by a veteran team, it builds a ~50-stock portfolio of mid-sized firms with steady growth. Neuberger’s analysis shows its sister mutual fund has achieved top-quartile growth with unusually low volatility. The small-mid blend positioning should reduce risk without sacrificing return​morningstar.ca. (Note: NBSM launched in 2024, so long-term track record is limited, but the strategy has decades of history.)

These growth ETFs illustrate how different approaches (international vs. blue-chip vs. small-cap) can capture growth opportunities. Investors should be prepared for ups and downs – as Morningstar observes, “big years tend to characterize growth investing”. Growth funds can drive portfolio gains in a bull market, but they carry higher risk if markets pull back.

Dividend ETFs

Dividend-focused ETFs aim for steady income and often invest in large, profitable companies with generous payouts. They can provide stability when growth stocks lag. For 2025, several dividend ETFs stand out for their yield, low fees, and quality:

• Schwab U.S. Dividend Equity ETF (SCHD) – A top-ranked U.S. dividend ETF (Morningstar Gold-rated) that tracks high-quality dividend growers. It holds about 100 large-cap U.S. stocks with 10+ years of rising dividends. SCHD’s expense ratio is just 0.06%, and it boasts $65.8 billion in assets​kiplinger.com. It currently yields ~3.7%, roughly double the S&P 500’s yield​kiplinger.com. Analysts praise SCHD for its “sensible, transparent, and risk-conscious approach” to dividends​kiplinger.com.
• Vanguard High Dividend Yield ETF (VYM) – A passive fund tracking the FTSE High Dividend Yield Index. VYM charges 0.06% and holds about 400 U.S. stocks with above-average dividends. Its asset base is also large (over $70B), and its yield is around 3%. VYM offers broad coverage and low cost, making it a core dividend holding. (Data: VYM AUM ~$73B, yield ~2.9%, exp 0.06%​kiplinger.com.)
• SPDR S&P Dividend ETF (SDY) – Targets the S&P High Yield Dividend Aristocrats (companies with 25+ years of rising dividends). SDY’s fee is 0.35%, with ~$19B AUM​kiplinger.com. It yields ~2.6%​kiplinger.com. SDY tends to hold more mid- and small-cap dividend payers than SCHD.
• Vanguard International Dividend Appreciation ETF (VIGI) – A global take on dividend growth. (Also mentioned above under growth). VIGI invests in developed and emerging market companies with rising dividends. Expense is 0.10%, and it has $7.8B AUM​kiplinger.com with a yield ~2.0%​kiplinger.com. VIGI’s diversified global exposure can complement U.S. dividend funds​kiplinger.com.

In summary, dividend ETFs like SCHD and VYM offer low-cost, diversified income. They may underperform in a high-growth market but provide defensive ballast in downturns. As one Morningstar analyst notes, dividend ETFs with strong fundamental filters (like SCHD) are designed for “better long-term risk-adjusted returns” than typical value benchmarks​kiplinger.com.

Technology ETFs

Technology remains a key growth engine, though it can be cyclical. After steep losses in 2022, tech ETFs rebounded strongly in 2023 (many up 20–30%)​wtop.com. Even if growth slows, tech’s long-term trends (AI, cloud, semiconductors) are expected to continue. ETFs can help investors play tech with diversification. Some leading tech ETFs for 2025 include:

• iShares U.S. Tech Independence ETF (IETC) – A large-cap U.S. tech ETF with a patriotic twist. It invests in American tech companies deemed “crucial for U.S. technological independence.” Morningstar awards IETC five stars and a silver medal, noting it has beaten both the Nasdaq-100 and peer tech funds over 1-, 3-, and 5-year periods​wtop.com. The fund uses machine learning in stock selection. It carries a low expense (0.18%) and is one of the top-rated tech ETFs by analysts​wtop.com.
• Technology Select Sector SPDR Fund (XLK) – The classic “tech sector” ETF. XLK tracks the top U.S. tech companies (Apple, Microsoft, Nvidia, etc.) and has about $64B AUM. Its expense ratio is 0.0945% (0.09% typically)​wtop.com. U.S. News ranks XLK as a top tech ETF. It is a good proxy for big-tech performance in 2025.
• Invesco QQQ Trust (QQQ) – Though not sector-specific, QQQ holds the Nasdaq-100 index (which is heavy in tech names). QQQ’s fee is 0.20%​invesco.com and AUM ~$200B. It has delivered very strong historical returns (~20–21% annualized over 5 years). (QQQ is worth considering for broad exposure to the leading tech growth stocks.)

• Global X Artificial Intelligence & Tech ETF (AIQ) – A thematic ETF focused on AI and innovation. It charges 0.68%. AIQ holds ~100 global companies in AI hardware, software, and innovation. It is a more aggressive thematic play (high expense, high risk) that can boost returns if AI growth accelerates.

• The tech sector may cool as valuations were high, but many firms are still growing earnings. As WTOP News notes, tech “has been a resilient sector,” and ETFs provide broad exposure so investors don’t have to pick individual winners​wtop.com. In all cases, expense ratios for top tech ETFs are quite low (typically under 0.20%​wtop.com), which helps performance.

S&P 500 and Broad Market ETFs

For many investors, a U.S. large-cap index ETF is the core holding. The S&P 500 index represents the 500 largest U.S. companies and has historically driven a large share of stock returns. Key S&P 500 ETFs include:

• Vanguard S&P 500 ETF (VOO) – Tracks the S&P 500. Ultra-low cost (0.03%). Broadly diversified across U.S. large caps. Since inception in 2010, it has returned around 12–15% annually (roughly 18% in the past 5 years). Its AUM is enormous (hundreds of billions). This fund is often recommended as a core holding for long-term U.S. equity exposure.
• SPDR S&P 500 ETF Trust (SPY) – Another S&P 500 ETF (the original one). Expense ratio ~0.0945%. Larger AUM than VOO but higher fee. SPY also closely mirrors the S&P 500’s returns (around ~18.5% 5-year annualized​finance.yahoo.com).
• iShares Core S&P 500 (IVV) – Similar to VOO, tracks S&P 500 with 0.03% fee. (Many investors simply choose between VOO and IVV – they are almost identical in holdings and performance.)
• Vanguard Total Stock Market ETF (VTI) – For even broader coverage, VTI tracks the entire U.S. stock market (large-, mid-, and small-caps). Fee 0.03%. It includes the S&P 500 plus smaller companies, so its returns are very close to VOO. VTI’s inclusion of small/mid stocks may slightly boost returns over time (but with a touch more volatility).

• Schwab U.S. Broad Market ETF (SCHB) – Another low-cost total market ETF, 0.03% fee.

For 2025, analysts generally favor staying invested in U.S. large caps. Even after strong gains in 2023–24, U.S. stocks may continue to lead if the economy remains relatively strong. For example, some forecasts expect “balanced growth” with moderating inflation, which could favor large-cap equities​www2.deloitte.com. A core S&P 500 ETF (VOO/IVV/SPY) provides essential diversification, capturing sectors like tech, healthcare, finance, etc.

ESG & Sustainable ETFs

Environmental, social, and governance (ESG) investing continues to attract investors. ESG ETFs screen for companies with higher ESG ratings, which may appeal to socially conscious investors (and some studies suggest ESG screens can offer risk benefits). Top U.S.-focused ESG ETFs include:

• iShares ESG Aware MSCI USA ETF (ESGU) – The largest ESG ETF for U.S. stocks. It tracks a U.S. index of companies with strong ESG scores. Expense ratio 0.15%​ishares.com. As of April 2025 it had about $12.4 billion in assets​ycharts.com. ESGU’s performance closely mirrors the S&P 500 (it essentially tilts the 500 toward ESG-friendly names).
• Vanguard ESG U.S. Stock ETF (ESGV) – Another broad U.S. ESG fund. Tracks the FTSE USA ESG Index (which excludes sin stocks and heavy polluters). Fee 0.12%. (ESGV’s holdings and returns are very similar to VOO but with no nuclear, oil sands, etc.)
• SPDR S&P 500 ESG ETF (EFIV) – S&P’s ESG version of the S&P 500. Expense 0.10%. (Very similar to SPY but with ESG filters.)
• iShares Global Clean Energy ETF (ICLN) – A sector-tilt ESG play, focusing on renewable energy companies worldwide (solar, wind, etc.). Expense 0.42%. ICLN is riskier and can be volatile, but captures the “green energy” theme.

ETF.com notes that “the largest ESG ETF is ESGU with $11.86B in assets”​ycharts.com (source: YCharts). The past year saw ESG funds roughly in line with benchmarks, as large-cap firms with solid governance also had good growth. For 2025, a moderate ESG allocation can be part of a diversified portfolio, especially if regulatory changes drive more capital to sustainable companies.

Small-Cap ETFs

Smaller companies can outperform in economic expansions. U.S. small-cap stocks (e.g. Russell 2000 index) often do well when the economy is healthy. Recommended small-cap ETFs include:

• iShares Russell 2000 ETF (IWM) – Tracks ~2000 U.S. small caps. Expense 0.19%​ishares.com. IWM is the go-to small-cap ETF, with AUM around $80 billion. Small caps tend to be more volatile than large caps, but in return offer higher growth potential.
• Vanguard Small-Cap ETF (VB) – Tracks the CRSP US Small Cap Index. Expense 0.05%. VB holds a broad range (~1400) of small-cap stocks. It’s very low cost and a good core small-cap holding.
• iShares Core S&P Small-Cap ETF (IJR) – Tracks the S&P 600 small-cap index. Fee 0.06%. IJR holds around 600 U.S. small stocks.
• SPDR S&P 600 ETF (SLY) – Tracks the same S&P 600 index, expense 0.15%.

For 2025, if the economy avoids recession, small caps could rally. However, they carry higher risk in a downturn. A small allocation (5–10% of stock portfolio) to funds like IWM or VB can improve diversification.

Summary Table: ETF Comparison

ETF (Ticker)	Category	Expense Ratio	5-Yr Annualized Return	Assets (USD bn)	Risk
Vanguard S&P 500 ETF (VOO)	S&P 500 Index	0.03%	~18%	~370	Moderate
Invesco QQQ ETF (QQQ)	Nasdaq-100 (Tech)	0.20%​invesco.com	~21%	~200	High
Schwab U.S. Dividend Equity ETF (SCHD)	High Dividend/Value	0.06%​kiplinger.com	~10%	65.8​kiplinger.com	Moderate
iShares ESG Aware MSCI USA (ESGU)	ESG/Sustainable	0.15%​ishares.com	~15%	12.4​ycharts.com	Moderate
iShares Russell 2000 ETF (IWM)	Small-Cap	0.19%​ishares.com	~8%	~80	High

Sources: ETF expense ratios and assets are from issuer data (see cited sources). 5-year returns are approximate based on market data. Risk (“Moderate” vs. “High”) is qualitative (small caps and tech are higher volatility).

Diversified ETF Strategy for 2025

Putting it all together, a balanced ETF portfolio in 2025 might combine:

• Core broad-market ETFs: e.g. 40–50% in U.S. broad or S&P 500 funds (VOO/IVV/VTI) for steady growth.
• Growth tilt: 10–20% in growth/tech ETFs (like XLK, QQQ, or an AI-themed ETF) to capture upside in innovation.
• Dividend/Value: 10–20% in dividend/value ETFs (e.g. SCHD, VYM) for income and defense.
• Small-cap allocation: 5–10% in small-cap ETF (IWM or VB) to diversify across size and grab extra growth potential.
• International/Global: 10–20% in a total global or international ETF (e.g. Vanguard Total World, or ACWI/VEA/VWO) for geographic diversification.
• ESG/Socially conscious: 5–10% in ESG/sustainable ETFs (ESGU, ESGV, or a clean energy ETF) if aligned with your values.
• Bonds/Defensive: Not covered above, but a prudent portfolio might hold 10–20% in bond ETFs (e.g. AGG, BND) to manage risk, especially for beginners.

The exact mix depends on risk tolerance. A classic 60/40 stock/bond split can still be implemented via ETFs (e.g. 60% stock ETFs as above, 40% bond ETFs). Rebalancing annually is wise. As Morgan Stanley notes, after a strong run, 2025 gains may be “more muted,” so a diversified approach helps balance potential​statestreet.com.

Importantly, many analysts emphasize flexibility. State Street’s 2025 outlook points out that active and thematic ETFs (sector, AI, healthcare) are growing, and investors will use ETFs to “make directional portfolio shifts” in response to change​statestreet.com. So in practice, use passive index ETFs as the foundation and consider a few active or niche ETFs to express convictions (e.g. an AI ETF or healthcare ETF if you expect those sectors to outperform).

Conclusion:

ETFs offer a simple way to access a wide range of opportunities. In 2025, a core portfolio of low-cost broad-market ETFs (like VOO, VTI, or international equivalents) can form the foundation, while targeted picks (tech, growth, dividends, ESG, small-caps) allow you to capture expected trends. Analysts at Morningstar and other firms recommend funds like Vanguard’s VIGI, Schwab’s SCHD, and thematic tech ETFs to balance growth and risk​morningstar.ca​kiplinger.com. Overall, experts see continued strength in U.S. equities and ETF flows. By diversifying across categories and keeping fees low (most top ETFs charge well under 0.20%​wtop.com​ishares.com), investors can position for modest returns while managing volatility.

Key Takeaway: A diversified ETF strategy – combining S&P 500 and total market funds with select sector and thematic ETFs – is widely advised for 2025. This balances participation in the projected growth areas (AI, technology, innovation) with defensive anchors (dividend/value, ESG, small-cap). Sticking to reputable, low-cost ETFs and reviewing your allocation each quarter can help capture gains while mitigating downside.

Internal Links: For more on building a balanced portfolio, see our ETF investing basics, Index fund strategies, and StockWealthPro’s guide to dividend stocks.

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