The growth in exchange traded funds (ETFs) has been staggering. What started out as a simple way to track the S&P 500 has ballooned into more than 1,194 different funds tracking various markets and asset classes. Overall, investors have plowed more than $1.33 trillion into ETFs since their creation 20 years ago.

Yet, the bulk of those assets remain in a few concentrated funds. For example, the ETF that started it all - the S&P 500 SPDR (ARCA:SPY) - has more than $126 billion in assets under management, while the Vanguard FTSE Emerging Markets ETF (ARCA:VWO) has more than $75 billion. Low expenses, hefty trading volumes and first-mover status have helped these funds capture the most investor money.

SEE: The Benefits Of ETF Investing

However, these giants aren't the only fish in the sea.

For investors, there's a whole host of other funds outside of the big boys that could provide better returns, diversification benefits and alternatives. Here are some of the best ETFs you've never heard of.

SPDR Barclays Aggregate Bond ETF
Despite low interest rates, bonds continue to be quite popular with investors. More than $243 billion currently sits in bond ETFs. As such, broad bond index ETFs - the iShares Core Total U.S. Bond Market ETF (ARCA:AGG) or Vanguard's Total Bond Market ETF (ARCA:BND) - have swooned with assets. These two funds track the Barclays Capital U.S. Aggregate Bond Index, which is considered the "gold standard" fixed income index. The benchmark tracks basically every kind of bond there is, from treasuries and investment-grade corporate debt to mortgage-backed securities.

Investors looking for broad bond exposure may want to give the SPDR Barclays Aggregate Bond ETF (ARCA:LAG) a go. The ETF tracks the same index as both BND and AGG, but does it at a cheaper expense ratio. LAG assets under management have grown to $658 million, but that is still a fraction of what both BND and AGG hold. That means many investors are paying much more for what should be a buy-and-hold investment.

SEE: Active Vs. Passive ETF Investing

iShares Gold Trust
With the various quantitative easing programs, debt issues and high inflation expectations, investor interest in gold has surged over the last few years. The physically backed SPDR Gold Shares (ARCA:GLD) has grown to behemoth size with more than $71 billion in assets. Despite those assets, State Street still charges 0.40% in expenses to hold the bullion.


Enter the iShares Gold Trust (ARCA:IAU). The fund is virtually identical to GLD, as it also holds gold bullion stored in a vault on behalf of investors. However, the fund only charges 0.25% to hold all of that gold. That's helped IAU track the price of the precious metal more closely than its huge twin is. For investors looking to hold a portion of their portfolio in gold, IAU could be the better long-term choice.

ETFS Physical PM Basket and ETFS Physical White Metals Basket Share
Speaking of precious metals, the trio of silver, platinum and palladium are benefiting from many of the same tailwinds as their yellow sister. At the same time, the trio is also benefiting from a host of industrial uses that are putting pressures on supplies. To that end, investors may want to give them a go.

For those already with gold exposure, the ETFS Physical White Metals Basket Share (ARCA:WITE) holds bullion of the three and is designed for investors who want a cost-effective and convenient way to invest in a basket of precious metals. Expenses run at 0.60%.

For those investors who want a "one-stop-shop" investment in precious metals, ETF Securities also offer the ETFS Physical PM Basket Shares (ARCA:GLTR). The fund holds the three metals plus gold bullion. This provides single ticker access to the precious metals market.

SEE: Building An All-ETF Portfolio

Vanguard Mega Cap 300 Growth ETF
So much investor and market pundit emphasis is placed on the S&P 500. However, it is possible to beat the index without much effort. For example, the ignored Vanguard Mega Cap 300 Growth Index ETF (ARCA:MGK) has managed to beat the S&P 500 by 1% annually over the last three years by basically owning the same basket of stocks.

It seeks to replicate the faster-growing half of the MSCI US Large Cap 300 Index and currently tracks 176 firms. While typical large-cap "growth" stocks like Google (Nasdaq:GOOG) are included in the index, the ETF does include hefty exposure to some value names like Coca-Cola (NYSE:KO). That makes it a perfect substitute for the venerable S&P. Add in the rock-bottom expense ratio of 0.12% and you have a recipe for market beating returns.

The Bottom Line
Investors have really taken a shine to exchange traded funds. Assets in the security type continue to grow, as portfolios take advantage of all their benefits. However, the bulk of investors' attention, at least when it comes to ETFs, is located in just a few big funds. By expanding their horizons, investors can find all sorts of other ETFs that could be better portfolio picks for their investing situations. The previous examples are just some of the other choices out there.


At the time of writing, Aaron Levitt did not own any shares in any company mentioned in this article.



Tickers in this Article: LAG, IAU, WITE, GLTR, MGK

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