There were over 8,000 exchange-traded funds (ETFs) around the world in 2022. While this gives me multiple potential ways to grow my Stocks and Shares ISA, it can be quite daunting. There are just so many to choose from.
Here then, I’m going to highlight three I’d buy today.
Going global
I consider an ETF that provides exposure to shares worldwide to be a core holding. One popular example is the Vanguard FTSE Global All Cap Index, which tracks 7,000 stocks globally.
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I don’t own this particular ETF, but I have a holding in a similar one. They all serve the same function, which is to give investors a stake in global stock market growth, including in Asia Pacific and the eurozone.
Today, such funds allocate around 60% to the US stock market. The top five holdings are Apple, Microsoft, Amazon, Nvidia, and Google-parent Alphabet.
Obviously, there’s a high concentration on technology firms here, which adds risk if the sector underperforms for a while. But the beauty with this index is that if certain stocks underperform long enough, then they’ll slip down the rankings and be replaced by ones growing faster.
For example, before the internet, most of the world’s largest companies were oil companies. Not so much today, though.
So what stocks will be at the top 10 years from now? Renewable energy or semiconductor firms? Luxury goods conglomerates or Chinese companies?
I have no idea, and it doesn’t matter. A global index ETF will capture that growth for me, regardless.
Cybersecurity
One industry I can only see growing in importance in the years ahead is cybersecurity. However, I’m no computer scientist or network hacker. So I’m not knowledgeable enough to pick winners and losers in this constantly evolving space.
My solution is to invest in a thematic cybersecurity ETF that should provide me with broad exposure to the industry’s growth. And one I’m invested in is L&G Cyber Security ETF (LSE: ISPY).
The fund’s top holdings include BlackBerry (the former phone maker that’s transitioned to a cybersecurity firm), SentinelOne, and UK-based Darktrace.
Of course, there’s always a risk that many of these individual stocks don’t perform. Cybersecurity is an extremely competitive industry, after all.
But the fund’s long-term performance has been excellent. The share price is up 147% since launch in 2015.
Cybersecurity is no longer a luxury for orgainsations. It’s an absolute necessity in today’s digital age, especially as cybercrime is expected to cost the world around $10.5trn by 2025. So I expect some big winners to emerge in this space.
Growth and income
Finally, I’d go with the Vanguard FTSE 250 UCITS ETF. This tracks the performance of the UK’s mid-cap index, which has struggled lately due to rising inflation and interest rates.
While those issues still persist, therefore creating risk, I expect the FTSE 250 to eventually bounce back. After all, mid-sized companies have the potential to grow more quickly than larger ones.
Top holdings include engineer IMI, Howden Joinery Group, and renewable energy specialist Greencoat UK Wind. All three are excellent stocks in my opinion.
Plus, this ETF has a dividend yield of 3.4%, offering the potential for both income and capital growth. If I had spare cash to invest, I’d buy this fund.
