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In this article, we will take a look at 15 of the largest ETFs in the world. If you want to see more of the largest ETFs in the world, go directly to 5 Largest ETFs in the World.
ETFs or exchange traded fund are pooled investment securities which often track a particular index or sector. Given that many ETFs have lower fees than mutual funds and the securities can often be more liquid, the popularity of ETFs have increased substantially over the past ten years.
With some of the most popular ETFs such as the SPDR S&P 500 ETF Trust (NYSE:SPY), investors can also get diversification fairly easily and also tax efficiency. Vanguard, one of the leading ETF issuers in the world, explains the tax efficiency of ETFs,
"Because ETFs trade on exchanges much like the way individual stocks do, the vast majority of trading in ETFs takes place between investors on the secondary market, with no impact on the ETFs' underlying securities. A much smaller share of ETF trading occurs on the primary market, where ETFs create or redeem shares through transactions with financial institutions known as authorized participants. For most primary market transactions, ETF shares are exchanged for a basket of securities rather than cash. Such "in-kind" transactions are not considered taxable events and thus also contribute to ETFs' tax efficiency."
Although there are times when ETFs may occasionally distribute capital gains that could be taxable depending on the investment account, many ETFs are generally tax efficient.
Top ETFs in the World
In terms of the top ETFs in the world, many of the top ETFs in the world are either equity ETFs or bond ETFs that focus on the broader U.S. economy or on a basket of larger companies based in the United States.
Although the United States faces headwinds like many other nations, the U.S. is arguably still one of the best places to invest in the world. The U.S. economy is the largest economy in the world and many of its companies are very technologically innovative. The country has a highly educated workforce and great infrastructure. With the U.S. dollar still the reserve currency of the world, the U.S. enjoys many advantages that other nations don't. The country also has great geography and substantial natural resources.
2022 Headwinds
The S&P 500 soared after the United States economy rebounded from the pandemic recession and as the Federal Reserve continued its supportive monetary policy up until the beginning of 2022. Many equity ETFs that tracked the S&P 500 also benefited from the rally.
Given 2022's Ukraine Russian war as well as the strong inflationary pressures outside of energy prices, however, the Federal Reserve has had to tighten its monetary policy with five rate hikes this year so far. Given that higher interest rates could potentially reduce demand, the S&P 500 has fallen around 21% year to date as of October 24 and the NASDAQ has declined around 31% year to date. As a result, many equity ETFs that track either the S&P 500 or the NASDAQ has fallen substantially year to date.
While there could be headwinds in the near term, the S&P 500 index still likely has substantial upside in the next decades as the U.S. economy is expected to continue to grow.
Image by qgadrian from Pixabay
Methodology
For our list, we took the top 15 from Statista's Market capitalization of largest exchange traded funds (ETFs) worldwide as of August 30, 2022 list.
15 Largest ETFs in the World
15. iShares Russell 1000 Growth ETF (NYSE:IWF)
AUM: $62.65 Billion
The iShares Russell 1000 Growth ETF (NYSE:IWF) has an AUM of $62.65 billion, making it one of the larger ETFs that track growth stocks.
According to the ETF, The iShares Russell 1000 Growth ETF (NYSE:IWF) "seeks to track the investment results of an index composed of large- and mid-capitalization U.S. equities that exhibit growth characteristics." It targets domestic stocks whose earnings are expected to grow at an above average rate relative to the overall market.
Given the previous bull market, some growth stocks have done really well and The iShares Russell 1000 Growth ETF (NYSE:IWF) performed really well before 2022. With the headwinds in 2022, however, many growth stocks are lower this year and The iShares Russell 1000 Growth ETF (NYSE:IWF) has fallen 27.35% year to date as of 10/24/22 in terms of its NAV.
14. iShares Core MSCI Emerging Markets ETF (NYSE:IEMG)
AUM: $65.44 Billion
iShares Core MSCI Emerging Markets ETF (NYSE:IEMG) is an ETF that "seeks to track the investment results of an index composed of large-, mid- and small-capitalization emerging market equities." The emerging markets have faced headwinds in 2022. Given the rise in Treasury yields in 2022, substantial capital has flowed out of emerging markets back to the United States. Furthermore, the strong dollar makes emerging market profits less valuable. As a result, the iShares Core MSCI Emerging Markets ETF (NYSE:IEMG) is down almost 28% year to date as of 10/25/22. As of Setpember 30, the ETF has also fallen an average of 1.53% per year over the last 5 years.
13. iShares Core S&P Small-Cap ETF (NYSE:IJR)
AUM: $67.53 Billion
iShares Core S&P Small-Cap ETF (NYSE:IJR)"seeks to track the investment results of an index composed of small-capitalization U.S. equities." Given the macro headwinds in 2022, the ETF is down around 16% year to date as of 10/26 and it could have more downside if economic data misses expectations. In terms of the last 10 years as of 9/30/22, iShares Core S&P Small-Cap ETF (NYSE:IJR) has performed well with average annual returns of 10.05%. As of 10/25, 2022, financials accounted for 18.5% of iShares Core S&P Small-Cap ETF (NYSE:IJR)'s fund, while industrials accounted for 16.62%.
12. Vanguard FTSE Emerging Markets Index Fund ETF Shares (NYSE:VWO)
AUM: $71.18 Billion
Vanguard FTSE Emerging Markets Index Fund ETF Shares (NYSE:VWO) is an ETF whose 'goal is to closely track the return of the FTSE Emerging Markets All Cap China A Inclusion Index.' As a result, the ETF invests in companies in emerging markets such as China, Brazil, Taiwan, South Africa and more. Given rising Treasury yields, capital has flowed out of the emerging markets this year and Vanguard FTSE Emerging Markets Index Fund ETF Shares (NYSE:VWO) is down 25.65% in terms of its NAV as of 10/26. As of 9/30/22, Vanguard FTSE Emerging Markets Index Fund ETF Shares (NYSE:VWO) has an average annual return of 1.44% over the last 10 years.
11. Vanguard Growth Index Fund (NYSE:VUG)
AUM: $74.57 Billion
Vanguard Growth Index Fund (NYSE:VUG) is an ETF that "seeks to track the performance of the CRSP US Large Cap Growth Index." In terms of the ETF's holdings as of 9/30, Apple and Microsoft make up 13.32% and 10.97% of Vanguard Growth Index Fund (NYSE:VUG), respectively. Amazon and Tesla account for 6.18% and 4.46% of the fund as well. With an AUM of $74.57 billion as of August 30, Vanguard Growth Index Fund (NYSE:VUG) ranks #11 on our list of 15 Largest ETFs in the World.
10. Vanguard Total Bond Market Index Fund (NASDAQ:BND)
AUM: $80.95 Billion
Vanguard Total Bond Market Index Fund (NASDAQ:BND) is an ETF that seeks "to track the performance of a broad, market-weighted bond index". Given that interest rates have increased substantially in 2022 and Vanguard Total Bond Market Index Fund (NASDAQ:BND) is considered as in the intermediate term bond asset class, Vanguard Total Bond Market Index Fund (NASDAQ:BND) has fallen 15.43% year to date as of 10/26/22. As of August 30, Vanguard Total Bond Market Index Fund (NASDAQ:BND) has an AUM of $80.95 billion. As of 9/30/22, Vanguard Total Bond Market Index Fund (NASDAQ:BND) has an average annual return of 0.83% in the last 10 years.
9. iShares Core U.S. Aggregate Bond ETF (NYSE:AGG)
AUM: $82.56 Billion
iShares Core U.S. Aggregate Bond ETF (NYSE:AGG) is an ETF that "seeks to track the investment results of an index composed of the total U.S. investment-grade bond market." Given the substantially higher interest rates, iShares Core U.S. Aggregate Bond ETF (NYSE:AGG)'s NAV has fallen 15.5% year to date as of 10/26/22. As of September 30, 22, iShares Core U.S. Aggregate Bond ETF (NYSE:AGG) has averaged an annual return of 0.85% in the last 10 years.
8. iShares Core MSCI EAFE ETF (BATS:IEFA)
AUM: $84.77 Billion
iShares Core MSCI EAFE ETF (BATS:IEFA) is an ETF that "seeks to track the investment results of an index composed of large-, mid- and small-capitalization developed market equities, excluding the U.S. and Canada." Due to the market weakness in 2022, the ETF's NAV has fallen 23.07% year to date as of 10/26/22. As of 9/30, iShares Core MSCI EAFE ETF (BATS:IEFA) has averaged an annual loss of 0.89% per year in the last 5 years.
7. Vanguard FTSE Developed Markets Index Fund ETF Shares (NYSE:VEA)
AUM: $93.08 Billion
Vanguard FTSE Developed Markets Index Fund ETF Shares (NYSE:VEA) is an ETF that "seeks to track the investment performance of the FTSE Developed All Cap ex US Index." The ETF invests in large-, mid-, and small-cap companies located in Canada and the major markets of Europe and the Pacific region.
Vanguard FTSE Developed Markets Index Fund ETF Shares (NYSE:VEA) Due to the market headwinds, the NAV of the ETF has fallen 22.74% year to date as of 10/26/22 and the ETF has averaged an annual loss of 0.63% in the last 5 years as of 9/30. In terms of the last 10 years, however, the ETF has averaged an annual return of 4.06% as of 9/30.
6. Vanguard Value Index Fund (NYSE:VTV)
AUM: $98.99 Billion
Vanguard Value Index Fund (NYSE:VTV) is an ETF that "seeks to track the performance of the CRSP US Large Cap Value Index, which measures the investment return of large-capitalization value stocks."
Despite the market headwinds, Vanguard Value Index Fund (NYSE:VTV)'s NAV is down only 6.31% year to date as of 10/26. In the last 10 years, the ETF has averaged an annual return of 10.5% as of 9/30. The ETF also has a realtively low expense ratio of 0.04%.
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Disclosure: None. 15 Largest ETFs in the World is originally published on Insider Monkey.
