I Switched from Mutual Funds to These 3 ETFs—Here’s Why

2025 hasn’t been a smooth ride. The economy has seen volatility, the market has seen several ups and downs, and investors are scrambling to look for low-risk options to invest their money. There are concerns about the impact of tariffs, and consumer spending is low.

Amidst the uncertainty, the only way to invest is to look for low-volatility investment options that can generate steady income. Exchange-traded funds have emerged as one of the top investment options this year. They allow investors to own a collection of stocks with just one investment and at a low cost. I was a die-hard fan of mutual funds, but the returns weren’t satisfactory, which is why I decided to make a switch to ETFs.

With thousands of ETFs to choose from, it can become overwhelming, and the industry is getting more crowded. Here are the top 3 I invested in.

Gold has always been considered a hedge against inflation, and the SPDR Gold Shares (NYSE: GLD) ETF is a top choice amid uncertain markets. Launched by State Street Global Advisors, the ETF is traded on exchanges in Hong Kong, Mexico, Japan, and Singapore. It is a trust that purchases, stores, and sells gold bullion, allowing investors to capitalize on rising gold prices.

It has a low expense ratio of 0.40% and is the largest gold ETF in the market. Its NAV has soared over 40% in a year and about 12%  in five years. The fund launched in 2004 and has kept pace with the S&P 500 over the years. Gold prices will fluctuate in the short term, but the past year has seen a steady upside. Geopolitical tensions and the expanding money supply have lifted the commodity’s value. GLD is a defensive investment, and it brings stability to my portfolio.

It is easier for me to pay the annual management fee as compared to buying and storing gold bullion. This ETF has become a centrepiece of my portfolio.

 

A reliable dividend ETF by Vanguard, the Vanguard High Dividend Yield ETF (NYSE: VYM) has a strong history of delivering steady income and capital appreciation. It has an expense ratio of 0.06%  and it tracks the performance of FTSE High Dividend Yield Index.

 

 

VYM has a yield of 2.57% and holds 582 stocks. The sector distribution includes:

It holds some of the biggest dividend paying companies in the top 10, including Walmart, AbbVie, Johnson & Johnson, and Exxon Mobil. The ETF pays quarterly dividends, and the strong portfolio allows it to remain consistent at it.

 

VYM has generated double-digit annualized market returns with a return of 10.4% in 5 years and 12.4% in the past year. The fund is filled with large-cap stocks that have a stable balance sheet and a record of strong financial performance. Despite market volatility, the fund has remained resilient and outperformed the S&P 500. It offers a safety net and steady dividend income.

 

I believe in the future of tech and wanted to make the most of the sector. Invesco QQQ Trust (NASDAQ:QQQ) allows me to do that. It holds the Magnificent Seven and has a yield of 0.58%. The fund is known for its impressive capital appreciation.

 

QQQ tracks the performance of the Nasdaq 100 index and has the 100 largest companies listed on the stock exchange. It aims for high growth while providing exposure to the best U.S. non-financial companies.

 

 

It is a tech-focused ETF with over 50% allocation to tech stocks, followed by 19.66% in consumer staples and 5.80% in healthcare. It is top heavy with the 10 holdings making up 51% of the portfolio and these include the Magnificent Seven like Nvidia, Alphabet, Tesla, Meta Platforms, Amazon, and Apple.

 

Slightly on the expensive side, QQQ has an NAV of 530.82 and is up 16% in 12 months. The NAV has soared over 100% in the past five years, generating impressive gains for investors. As long as the tech sector continues to expand, QQQ is set to benefit.