ETF ideas | ETF screen | Fidelity (2024)

2023 has gotten off to a better start than 2022—stocks are up more than 4% year to date, compared with an 8% decline by the same point last year. If you are interested in exploring exchange-traded funds (ETFs) to help build or manage your investment mix, consider using Fidelity's ETF Screener (login required) to help quickly search for opportunities.

Below, we feature 5 ETF screens, plus the top results for each.

Sector ETFs

After a 38% shellacking in 2022, consumer discretionary stocks were the best-performing sector year to date—up more than 12%, as of late February. If you think that momentum may continue, here are the 5 largest consumer discretionary sector ETFs by net assets, as of February 23, 2023:

• Consumer Discretionary Select Sector SPDR Fund ()
• Vanguard Consumer Discretionary Index Fund ETF ()
• iShares US Home Construction ETF ()
• Fidelity MSCI Consumer Discretionary Index ETF ()
• SPDR S&P Homebuilders ETF ()

After running any screen, there are a number of factors to consider. For example, with a sector screen, you should be aware of the potential for concentration risk. This is basically equivalent to putting your eggs in a single basket—if you are not diversified across the rest of your investments. Be sure to consider how a sector-themed ETF fits in with the rest of your investments.

Large-cap ETFs

If you have a positive view on large-cap stocks, you could consider the large-cap ETF screen on Fidelity.com. Here are the top 5 results sorted by net assets, as of February 23, 2022:

• SPDR S&P 500 ETF Trust ()
  
• iShares Core S&P 500 ETF ()
• Vanguard Total Stock Market Index Fund ETF ()
• Vanguard S&P 500 ETF ()
• Vanguard Dividend Appreciation Index Fund ETF ()

An important step you can take after running a screen is to evaluate the quality of the list that is generated. Does it appear that the screen results match your search criteria? Do they align with your objectives? Assessing the screen results as a whole can help you figure out if it's finding what you are interested in.

Small-cap ETFs

Over the past several months, small caps have also shown bouncebackability. If you are interested in small-cap ETFs, you can explore the small-cap blend theme on Fidelity.com. Here are the top 5 results sorted by net assets, as of February 23, 2022:

• iShares Core S&P Small-Cap ETF ()
• iShares Russell 2000 ETF ()
• Vanguard Small-Cap Index Fund ETF ()
• Schwab US Small-Cap ETF ()
• Schwab Fundamental US Small Company Index ETF ()

After running a screen that you think is generating investments that match what you are looking for, you can then dig deeper. For example, you should be comfortable with the risk that any investment brings. Small caps are inherently more risky than large caps, so these small-cap ETFs require a little extra due diligence to understand what you are considering owning.

Inflation-protection ETFs

While inflation has clearly cooled down, that doesn't mean it's gone for good. If you are looking to add some inflation protection to your investment mix, one of the thematic ETF screens on Fidelity.com is the inflation-protection bond theme. Compared with bonds and bond mutual funds, bond ETFs have unique characteristics, including intraday trading and holdings transparency. Here are the top 5 results sorted by net assets, as of February 23, 2023:

• iShares TIPS Bond ETF ()
• Vanguard Short-Term Inflation-Protected Securities Index Fund ()
• Schwab US TIPS ETF ()
• iShares 0-5 Year TIPS Bond ETF ()
• SPDR Portfolio TIPS ETF ()

Given the relatively unique aspects of bond ETFs, it may help to first understand how bond ETFs work. And of course, a key next step with a screen like this one would be to research any individual bond ETF that you are interested in before making a decision.

Global-bond ETFs

There are several other preset bond screens on Fidelity.com. For example, if you are looking for geographically diversified bond ETFs, you might consider the global-bond theme. Here are the top 5 results, sorted by net assets, as of February 23, 2023:

• iShares International Treasury Bond ETF ()
• SPDR Bloomberg International Treasury Bond ETF ()
• SPDR FTSE International Government Inflation-Protected Bond ETF ()
• Franklin International Aggregate Bond ETF ()
• SPDR Bloomberg Short Term International Treasury Bond ETF ()

Another tip is to take a look at the holdings within an ETF. That is certainly the case for a global-bond fund, where you may not know some of the companies whose bonds could be included in the fund. Indeed, the holdings within these funds can be quite different from one another, and so you will want to determine if the ETF as a whole aligns with your objectives and risk tolerance. You can find an ETF's components on its ETF snapshot page on Fidelity.com, under Portfolio Composition. On that page, you can also find the ETF's style (value, growth, or blend) and size (large, mid, or small), as well as ratings and key statistics.

Digging deeper into your ETFs

If you think one or more of the ETFs identified by a screen is worth considering to help manage the risk in your portfolio or achieve your objectives, your next step should be to research it further. And always remember to evaluate a fund's costs, including the following:

• Expense ratio: Look for low expense ratios to help reduce your overall costs.*
• Bid-ask spread: Look for small bid-ask spreads to help reduce costs of investing.
• Tracking error: Look for a low tracking error to find ETFs that indicate a better job of replicating their benchmark indexes.

If you find ETFs with similar objectives, you could compare their expense ratios, bid-ask spreads, and/or tracking error to find the better deal. You can filter for all of these factors using the ETF Screener.

Finally, you should fully understand the risks involved in any investment strategy. Any investing opportunity should be considered within the context of a well-diversified investment strategy that conforms to your specific time horizon, objectives, and risk parameters.