3 ETFs to Buy for Life-Changing Returns

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A recent article about ETFs to buy on Morningstar.com caught my attention for several reasons.

First, Ryan Jackson, manager research analyst for passive strategies at Morningstar, recommended highly rated stocks. AND F who have experienced difficulties recently. This is the buy-on-the-dip investment strategy – never bad.

Second, Jackson’s three picks made for an intriguing 3 ETF, 60/40 portfolio. Jackson didn’t talk about this angle; I just went with it.

You put 40% in Invesco Total Return Bond ETF (NYSEARCA:GTO), 30% in the iShares Core S&P Small Cap ETF (NYSEARCA:IJR), and 30% in the Vanguard Total International Equity ETF (NASDAQ:VXUS). I’m not sure about GTO, but I know I’ve recommended the other two in the past.

To make this an original piece, I will choose three different ETFs for my 3-stock, 60/40 portfolio that are also highly rated and poised to deliver life-changing returns for investors.

Here is.

VanEck Dynamic High Income ETF (INC)

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For the 40% bond portion of my 3-ETF portfolio, I chose the VanEck Dynamic High Income ETF (NYSEARCA:INC.). This fund aims to offer investors high current income and capital appreciation. Open for just 19 months, it has accumulated just $805,000 in net assets.

Why INC?

THE Actively managed ETF fee 0.43%. It generates monthly income for shareholders, currently yielding 5.39%. Thus, it allocates assets to the highest yielding market segments while diversifying into a number of income-generating asset classes.

INC’s portfolio consists of 12 ETFs and US Treasuries. Eight of the 12 ETFs are VanEck funds. The highest weight holding is the VanEck Fallen Angel High Yield Bond ETF (NASDAQ:ENGL), which represents 35.42% of net assets.

Other ETFs include those focused on dividend stockspreferred stocks, business development companies and even high yield bonds in emerging markets.

Overall, the fixed income component represents 53.3% of INC’s net assets, with the remainder made up of U.S. and non-U.S. stocks and other assets.

In 2023, it generated a total return of 9.6%. Since the start of the year, its total return is 3.3%.

Dimensional International Small Cap ETF (DFIS)

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THE Dimensional International Small Cap ETF (BATS:DFIS) is a change from the three ETFs in the intro. I chose international small caps, opting for US stocks for the remaining 30% allocated to stocks.

DFIS began in March 2022 and has grown to $1.8 billion of net assets over the two years that followed. The actively managed ETF invests in 3,354 small-cap stocks in 22 developed countries, including Japan (22.91% of net assets), the United Kingdom (14.17%) and Canada (10. 74%).

The weighted average market capitalization of the securities is $3.01 billion, with an overall price-to-book ratio of 1.39x and a price-to-sales ratio of 0.70x. The top three sectors by weight are industrials (25.13%), consumer discretionary (12.94%), and materials (12.78%). The top 10 stocks represent only 3% of the portfolio.

Although actively managed, it charges only 0.39% or $39 per $10,000 invested and has a low turnover rate of 10%.

Vanguard Total Stock Market ETF (VTI)

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Vanguard Total Stock Market ETF (NYSEARCA:VTI) is a massive ETF with $375.1 billion in net assets.

Passively managed and launched in May 2001, it tracks the performance of CRSP US Total Market Indexa collection of stocks with market caps across the spectrum from major companies such as Microsoft (NASDAQ:MSFT), the largest stake at 5.92%, to smaller companies like Flower food (NYSE:FLO) at 0.01%.

The top three sectors in terms of weight are technology (32.10%), consumer discretionary (14.10%) and industrials (13.10%). The top 10 stocks represent 28% of net assets. The fund’s turnover is minimal at 2.0%, which is why it only charges 0.03% in fees.

Although the median market cap is large, at $150 billion, it still has some mid-caps (21%) and small caps (8%).

Over the past five years, its annualized total return has been 14.42%, and year-to-date, it’s up more than 12%.

This is a low-risk, low-cost way to play the US markets.

As of the date of publication, Will Ashworth did not hold (either directly or indirectly) any positions in any securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publishing Guidelines.

Will Ashworth has been writing about investing full-time since 2008. Publications he has appeared in include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger and several others in the United States and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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