3 Great ETFs for an IRA in 2025

Daniel Sotiroff: ETFs have a big advantage over mutual funds: They’re more tax efficient. So, they’re generally great for taxable investment accounts. But the ETF structure doesn’t really improve the tax efficiency of income-oriented investments. The income produced by bond ETFs or dividend ETFs is still taxable as regular income, so they’re great candidates for tax-deferred accounts like an individual retirement account.

3 Great ETFs for an IRA in 2025

1. Vanguard High Dividend Yield ETF VYM
2. Vanguard Core-Plus Bond ETF VPLS
3. JPMorgan Income ETF JPIE

First up for today is a fan favorite. Gold-rated Vanguard High Dividend Yield ETF, which trades under the ticker VYM, is one of our highest-rated dividend-income funds. It’s a great option for investors who want to increase their income while still investing in stocks.

VYM consistently delivers about 1.0 to 1.5 percentage points more yield than the US market while still diversifying across hundreds of stocks. And, most importantly, it’s cheap. Vanguard charges just 0.06% annually for this ETF, making it one of the cheapest ETFs in the large-value category.

Switching gears to bond ETFs, Bronze-rated Vanguard Core-Plus Bond ETF, ticker VPLS, is a new option for investors who are willing to bear incremental risk to earn incremental income over a broad bond market ETF. The managers don’t make a lot of big bets on interest-rate moves, so it should behave a lot like the broader bond market when interest rates rise or fall.

Vanguard’s management team largely relies on additional credit risk and bond selection to outperform the market. For example, at any given time, they can allocate up to 30% of the fund’s assets to high-yield bonds, while most broad bond market ETFs hold little, if any. The long-term average should land somewhere around 10% to 15%.

Another bond ETF, Gold-rated JPMorgan Income ETF, ticker JPIE, rounds out my list for today. This is a multisector bond ETF, meaning it can invest across multiple segments of the bond market, such as corporate bonds, various flavors of mortgage-backed bonds, and asset-backed bonds, among others. So far, it has consistently delivered a yield of 1.5 to 2.5 percentage points higher than its category index: the Bloomberg Universal Index.

This is also an actively managed ETF, so the management team will play a large role in its long-term success. It’s a good option for income-focused investors who are willing to bear a little more risk than the broader bond market and are willing to put in some time to keep tabs on the managers.

Comanager Andrew Norelli has managed a mutual fund version of this strategy since 2014, while Drew Headley and Tom Hauser bring specialized expertise in their respective areas. That trio collaborates with a much larger team of analysts and traders to determine allocations and manage risk. We’re so confident in this team’s abilities that we upgraded the People Pillar on this ETF to High from Above Average in mid-December.

That’s a short list of some good options for an IRA. As a general rule, bond and income ETFs are really best held in a tax-deferred account.

Watch Vanguard Fee Cuts May Be Small, but They’re a Win for Investors for more from Daniel Sotiroff.