Three Attractive ETFs to Consider Now

The stock market has faced a lot of ups and downs in 2025. Even though the S&P 500 has recovered from correction levels, there are still fantastic investment possibilities available. In particular, several exchange-traded funds (ETFs) present appealing options for long-term investors at this moment. Here, we will discuss three ETFs that I have recently included in my investment portfolio and plan to continue acquiring.

An Undervalued AI ETF

The Ark Autonomous Technology & Robotics ETF (ARKQ) is currently down approximately 17% from its 52-week high. This ETF offers a promising long-term investment opportunity. I recently added it to my portfolio because I wanted to increase my exposure to the field of artificial intelligence (AI). However, I faced a couple of challenges.

First, I admit that AI stocks are not my strongest suit. As a value investor, my expertise lies more in commodities like banks and real estate. Second, many other AI ETFs tend to concentrate on the same large technology stocks.

What sets this ETF apart is its active management, led by tech investor Cathie Wood. It holds roughly three dozen stocks, featuring some that are less known in the AI sector but have great potential. While Tesla remains its biggest holding, other significant stocks like Kratos Defense & Security, Teradyne, and Archer Aviation are attracting attention. Overall, this ETF emphasizes high-potential companies that could significantly benefit from the AI wave, rather than just investing in well-known tech giants.

My Top ETF Choice for 2025

At the start of 2025, small-cap stocks, represented by the Russell 2000 index, were trading at their lowest price-to-book ratios compared to large-cap stocks in over 25 years. Moreover, the S&P 500 has been outperforming the Russell 2000 this year, widening the gap further.

I believe this gap will significantly reduce, especially if we enter a declining interest rate environment, as many experts anticipate. Lower interest rates generally favor small-cap stocks for various reasons; they often rely on borrowed capital, and lower rates reduce costs. Furthermore, as rates drop, investors often divert funds from fixed-return assets like CDs and Treasuries towards more growth-focused companies.

For these reasons, I consider the Vanguard Russell 2000 ETF (VTWO) my top ETF pick for 2025, and it holds the most weight in my investments among the three ETFs discussed.

Still Affordable Despite High Performance

I included the Vanguard International High Dividend Yield ETF (VYMI) in my portfolio last year, and it has been one of my best-performing investments, gaining around 10% in 2025 alone.

Even with its shares trading close to their 52-week high, this ETF offers a yield of 4.4% and could be a worthy option, especially for those looking to diversify internationally.

This ETF aims to track an index of international stocks known for above-average dividend yields. The index comprises nearly 1,500 stocks, weighted so that larger companies represent a more significant portion of the fund. Even though it focuses on international stocks, many holdings are familiar names among U.S. investors, such as Nestlé, Toyota, and Shell, which are all included among its top contributors.

The fund has a low expense ratio of 0.17%, and even after its recent gains, it still appears reasonably priced. For instance, its average price-to-earnings ratio stands at around 12, while its component stocks trade at 1.4 times their book value. In comparison, the U.S.-based Vanguard High Dividend Yield ETF (VYM) shows a higher average P/E ratio of 19.8 and a P/B of 2.9.

Great Opportunities for Long-Term Investors

It's essential to note that I do not predict how these three ETFs will perform in the immediate future. However, from a long-term investment viewpoint, now seems like an appealing time to purchase all three. I already own all of them in my portfolio for various reasons and plan to gradually increase my shares as long as these valuations hold.

Note: The author has positions in Ark ETF Trust-Ark Autonomous Technology & Robotics ETF, Vanguard International High Dividend Yield ETF, and Vanguard Russell 2000 ETF. The information provided here is for educational purposes and should not be construed as financial advice.

ETFs, Investing, Stocks