£20k to invest for ten years? These exchange traded funds (ETFs) can turn that into almost £100k!

Investor demand for exchange-traded funds (ETFs) is going from strength to strength. These financial instruments have generated revenues worth $1.6trn by 2024, according to the report Bank of Americataking total assets under management (AUM) to over $15trn.

It’s not hard to see their appeal. Share investors like me can try to identify better returns by buying individual stocks. But that doesn’t mean ETFs can’t deliver incredible returns on their own.

Additionally, these complex financial products often allow people to spread risk by investing in multiple assets.

Top bag

I hold several ETFs in my investment pension (SIPP). And I’m looking for more to add to my portfolio in the new year.

I iShares Russell 2000 (NYSEMKT:IWM) is at the top of my buy list today. It provides exposure to hundreds of small US stocks, with a bias that has delivered an average annual return of 9.8% since 2019.

Specifically, the fund holds stocks whose market capitalization falls below $400m. Major assets include the seller Sprouts Farmers Marketdrug maker Insmedagain FTAI Aviationwhich provides aerospace aftermarket services.

I already own US-focused ETFs, but not one that deals in small, domestically focused companies. I think that such investments can be successful under the new Trump administration if, as expected, significant trade tariffs are introduced that stimulate the demand for locally produced goods and services.

That said, I know that performance can be disappointing if the US economy experiences a new recession.

Two others I am considering

The next bag I’m considering is SPDR MSCI World Technology ETF (LSE:WTEC). Over the past five years it has produced an average annual return of 22%.

Although it is quoted in US dollars on the London stock market, I think it deserves a closer look. Non-sterling shares, funds, and trusts expose investors to exchange rates that can eat into returns.

Like many technology-based funds, it is dominated by American big hitters Nvidia, an appleagain Microsoft. These three alone comprise 55.1% of total ETF funds, in fact.

However, foreign companies including SAP, ASML, again Tokyo Electron offer some variety. This could be important with potentially disruptive US trade tariffs on the horizon.

This SPDR fund delivers incredible returns as the digital revolution continues. I am sure that emerging technologies such as quantum computing, robotics, blockchain, and artificial intelligence (AI) will provide many opportunities for growth.

The storage market alone is expected to grow at an annual rate of 28.4% between now and 2030, according to the boffins at Statista.

It turns £20k into £100k

Past performance is not a reliable guide to future earnings. But I am confident that these ETFs can continue to deliver good long-term returns.

Indeed, if they can replicate their performance of the past five years, a sum of £20,000 invested in equity in them today could turn into around £100,000 ten years from now (£97,056, to be exact).