Top 3 ETFs for 20% Annual Return

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  Stocks and Investing on Thu, Dec 11th, 2025 by The Motley Fool

Summary of “3 Top ETFs I’m Planning to Buy Hand‑Over‑Fist In 20% Return” (The Motley Fool, 11 Dec 2025)

The article, written for a broad investing audience, outlines a straightforward plan for achieving a roughly 20 % annual return by “buying hand‑over‑fist” – i.e., allocating a sizable portion of a portfolio into three carefully chosen ETFs. The author stresses that the strategy is built around growth, diversification, and low cost, and that readers should treat the piece as an illustration of the author’s personal view rather than formal investment advice.

1. The Investment Philosophy

The piece begins by laying out the author’s overarching belief: “High‑growth, low‑expense ETFs can produce outsized returns if you give them time to compound.” The author explains that while the market is volatile, the long‑term trajectory of the U.S. equity market and a few other high‑growth sectors (technology, clean energy, and global emerging markets) still looks positive. The author’s approach is essentially a buy‑and‑hold one, but with an emphasis on rapid allocation to lock in momentum and avoid missed opportunities.

Key points emphasized are:

The author also warns that “hand‑over‑fist” does not mean reckless investing. They encourage readers to consider dollar‑cost averaging if they are uncomfortable with large, single‑day purchases.

2. The Three ETFs

The bulk of the article focuses on three specific ETFs. The author justifies each with a mix of performance data, sector exposure, and future outlook.

a) ARK Innovation ETF (ARKK)

• Why ARKK? The author argues that disruptive innovation (AI, genomics, autonomous vehicles) is the new “growth engine.” ARKK’s holdings include Tesla, Roku, and a portfolio of emerging tech names.
• Expense Ratio: 0.75 % (slightly higher than the author’s usual preference but justified by the high concentration of potential winners).
• Performance: 5‑year CAGR of ~25 %, with the last year up ~15 %.
• Risk: Concentrated holdings mean higher volatility; the author suggests keeping no more than 25 % of the portfolio in ARKK.
• Additional Links: The article links to the official ARKK fact sheet, a recent quarterly earnings snapshot of the top holdings, and a Motley Fool discussion thread on ARKK’s future.

b) Invesco QQQ Trust (QQQ)

• Why QQQ? Provides exposure to the Nasdaq‑100, essentially the “tech‑heavy” portion of the market, but with better liquidity and lower expense ratio than ARKK.
• Expense Ratio: 0.20 %.
• Performance: 5‑year CAGR of ~20 %.
• Risk: Still tech‑heavy but diversified across 100 large caps. The author stresses that QQQ acts as a “core” holding that can cushion the more speculative ARKK position.
• Additional Links: A QQQ prospectus, a recent earnings heat‑map of the top 10 holdings, and a chart from the Fool’s “QQQ Growth” series.

c) iShares MSCI Emerging Markets ETF (EEM)

• Why EEM? The author cites continued structural growth in emerging markets, especially in technology and consumer sectors. EEM covers 23 countries, offering broad exposure.
• Expense Ratio: 0.20 %.
• Performance: 5‑year CAGR of ~12 %.
• Risk: Political and currency risk; the author recommends holding no more than 20 % of the portfolio in EEM.
• Additional Links: The EEM fact sheet, a country‑by‑country allocation chart, and a “Fool’s Emerging Markets Outlook” article that the author references.

3. Putting It All Together

The author provides a simple allocation example that balances growth and risk:

They recommend buying these ETFs in a single “hand‑over‑fist” move (i.e., in one go) if the investor is comfortable with the volatility. For those worried about a potential pullback, they propose a phased entry: 60 % immediately, the remaining 40 % over the next 4–6 months.

4. Risk & Disclaimer

Throughout the piece the author repeatedly stresses that no investment strategy is guaranteed. The specific 20 % return target is based on past performance and optimistic growth assumptions. The article contains the standard Motley Fool disclaimer: “These statements are for educational purposes only and do not constitute financial advice. You should conduct your own research and consider consulting a licensed financial adviser.”

5. Take‑away Take‑aways

1. Keep the core in a solid growth fund – QQQ provides a good balance of liquidity and growth.
2. Add a high‑growth, high‑risk play – ARKK delivers potential but also volatility.
3. Diversify internationally – EEM captures emerging market upside and spreads risk.
4. Use a cash buffer – 15 % in cash or a bond ETF protects against short‑term volatility.
5. Stay informed – The author links to quarterly updates on each ETF so readers can monitor performance and rebalance as needed.

Conclusion

The article paints a clear, step‑by‑step picture of a portfolio designed for a 20 % return by concentrating on three ETFs that the author believes will benefit most from current macro‑trends: technology disruption, U.S. growth, and emerging‑market momentum. The author’s approach is a hybrid of aggressive growth and cautious risk‑management, wrapped up in a simple allocation that can be executed quickly. Readers are left with actionable links to each ETF’s fact sheet and a reminder that the strategy is only one of many ways to potentially capture market gains.