Hey, everybody! Kyle here today, and I'm celebrating the New Year by talking to you about one of my favorite topics: the best ETFs for 2025.

I've been writing this feature for nearly a decade—most recently, during my time spent here growing Young and the Invested (and our newsletters, The Weekend Tea and Retire With Riley), but before that, at Kiplinger.com and InvestorPlace.com. And it remains one of my five favorite things about the December-January season.

Also on the list, in no particular order, are snow, bowl season, my mom's chocolate-chip cookies, and the exceedingly generous holiday-season hours of local hibachi joints.

Anyways, the "best ETFs" feature is an annual look-ahead at exchange-traded funds (ETFs) that I, as well as industry experts, believe will prove useful in the year ahead. It's a yearly chance to help readers find portfolio holdings that align with their goals, and an excuse for me to dive headfirst into one of my favorite subjects.

So, here's a look at what looks good heading into 2025.

The Tea

Exchange-traded funds are, in short, one of the most versatile and cost-effective tools in the financial toolbelt. ETFs allow you to instantly diversify your portfolio with the click of a button, make tactical investments in sectors and themes with lower risk than you'd get with a single-stock investment, and invest in some asset classes (gold, oil, and other commodities immediately come to mind) in a much easier manner than any other available option.

Young and the Invested Tip: Don't know what an ETF is? Check out our primer, as well as a list of the best ETFs for beginners.

Because ETFs can play more than one role in a portfolio, my year-ahead lists tend to revolve around three specific types of ETFs:

• Core ETFs: ETFs you can literally buy and hold for decades, even into (and during) retirement. They cover the basic building blocks of most traditional portfolios. 
• Tactical ETFs: ETFs that I've selected because they can leverage a trend that experts believe will come to the fore in the year ahead.
• Defensive ETFs: These are ETFs that you might not necessarily buy at the beginning of the year. But if at some point, you feel like being more defensive with your portfolio, these ETFs are generally designed to limit losses in some way.

In this week's letter, I'll quickly run you through a few of my favorites, then I'll point you toward my fuller list of all 15 Best ETFs of 2025.

The Take

To give you a decent sampling, here's a look at a core ETF, a tactical ETF, and a defensive ETF:

SPDR Portfolio S&P 500 ETF

• Type: Core
• Style: U.S. large-cap stock
• Expense ratio: 0.02%, or 20¢ annually on a $1,000 investment

For regular readers, yes, the SPDR Portfolio S&P 500 ETF (SPLG) is back. And it will be, year after year. You see, large-cap U.S. stock funds are an anchor of most portfolios, providing a combination of growth potential and dividend income. You could go with an actively managed fund, but in truth, professional fund managers actually struggle to do better than the S&P 500 (an index of 500 large, U.S.-listed companies) … so it makes a lot of sense to just track the S&P 500 instead. And among funds that track the S&P 500, SPLG is the cheapest, at a mere 0.02% annually. 

An important thing to know about the S&P 500: It's diversified, but that doesn't mean it's balanced. The index is cap-weighted, which means the larger the stock, the higher its representation in (and thus the more the stock affects) the index. So right now, multitrillion-dollar companies Apple (AAPL) and Nvidia (NVDA) carry the biggest weights in the SPLG (at around 7% each), and technology stocks make up nearly a third of the ETF's assets! For comparison's sake, the entire materials sector accounts for just 2%.

Young and the Invested Tip: Have a larger nest egg and a lot of investing experience? Consider these top investments for accredited investors.

iShares Bitcoin Trust ETF

• Type: Tactical
• Style: Cryptocurrency (Bitcoin)
• Expense ratio: 0.12%*, or $1.20 annually on a $1,000 investment

"Let the crypto community rejoice." So says CFRA, which says to "expect more openness to banking crypto firms, beneficial tax policies, legislative progress, and discussion of the U.S. government buying Bitcoin (e.g., strategic reserve)."

Pure-play Bitcoin ETFs allow you to enjoy Bitcoin's gains without having to own a separate cryptocurrency account. And as far as Bitcoin ETFs go, it's difficult to argue against the iShares Bitcoin Trust ETF (IBIT), which is the largest such ETF by assets and one of the cheapest. IBIT provides 1-to-1 exposure to Bitcoin, which it actually holds in a variety of accounts. From a security perspective, the private keys associated with this Bitcoin are kept in "cold storage"—that is, they're generated and stored offline, with computers or devices that aren't connected to the internet, protecting them from hacking.

If Bitcoin continues its ascent in 2025, the iShares Bitcoin Trust ETF will soar with it.

But it's worth warning with IBIT, as well as any other fund that has run up in anticipation of a friendlier administration: It's at least possible that much of the optimism has already been baked in, and that further gains could be more difficult to come by.

* Includes 13-basis-point fee waiver. Waiver expected to expire on Jan. 11, 2025, at which point annual fees will become 0.25%.

Invesco S&P 500 Low Volatility ETF

• Type: Defensive
• Style: U.S. low-volatility stock
• Expense ratio: 0.25%, or $2.50 annually on a $1,000 investment

The Invesco S&P 500 Low Volatility ETF (SPLV) is an index ETF that holds the 100 stocks from the S&P 500 Index that have the lowest realized volatility over the past 12 months. Volatility here, Invesco says, "is a statistical measurement of the magnitude of up and down asset price fluctuations over time." The less volatile the stock, the greater its weighting every three months, when the fund rebalances. Market volatility usually goes hand-in-hand with big drops in stocks. So, naturally, low-volatility stocks are considered a way to hedge against a downward swing in the market. Thus, SPLV could be one of the best ETFs for 2025 ... if we get plenty of turbulence throughout the year.

Young and the Invested Tip: If you're looking to invest tactically in the new year, it's difficult to beat Fidelity's ETF lineup.

You can check out my full list of all 15 picks (including longer explanations of the five above) at our Best ETFs for 2025 page.

Where Can You Invest in These ETFs?

You can invest in ETFs through virtually any brokerage account or investing app. But here are a few noteworthy platforms worth bringing up right now:

• SoFi Invest®: SoFi Invest allows you to trade stocks, ETFs, and options fee-free (and options don't even have contract fees). You can invest for yourself, or put your portfolio on autopilot with SoFi's free robo-advisory services. SoFi Invest frequently offers sign-up bonuses, too—right now, you can get between $10 and $1,000 in free stock for funding a new Active Invest account.
• E*Trade: E*Trade is one of the leading trading platforms for investors and traders of all skill levels. It offers one of the largest selections of asset classes, and provides zero-commission trading on stocks, ETFs, mutual funds, Treasuries, and new-issue bonds.
• Robinhood: The Robinhood investment app helped pioneer commission-free trading, and users currently enjoy no commissions on stocks, ETFs, and options. Robinhood also frequently offers free stock for signing up—currently, you can get $5 to $200 to put toward fractional shares if you sign up, link a bank account, and fund your account with at least $10.

Riley & Kyle

Young and the Invested

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