7 Really, Really Cheap ETFs

An image of a pair of glasses on a newspaper
Credit: Shutterstock photo

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

There is no doubt about it. Passively managed index funds and exchange-traded funds (ETFs) are driving fund industry fees lower while saving investors billions of dollars in the process. Last year, investors paid record low fees, saving a tidy $4 billion along the way.

"The asset-weighted average expense ratio for active funds was 0.72% in 2017, down from 0.75% in 2016, and on the passive side, the asset-weighted average expense ratio was 0.15% in 2017, down from 0.16% in 2016," reports Pensions & Investments .

Not surprisingly, data suggest ETF investors are flocking to the lowest-cost funds . Since the start of last year, ETFs with expense ratios of no more than 0.2% per year, or $20 on a $10,000 investment, have been attracting the bulk of ETF inflows. Within that group, funds with annual fees of 0.1% or less are the truly prodigious asset gatherers.

" Vanguard Group has the lowest asset-weighted average expense ratio at 0.1%, followed by State Street Global Advisors ' SPDR ETFs at 0.16% and iShares at 0.25%," according to Pensions & Investments.

These days, ETFs have gotten so inexpensive that investors do not even have to pay more than per year for domestic equity or aggregate bond exposure. Here some of the cheapest ETFs on the market today.

Cheap ETFs: SPDR Portfolio Large Cap ETF (SPLG)


0.03% per year, or $3 on a $10,000 investment.

Expense ratio:

There are several ETFs trading in the U.S. sporting annual fees of just , so there is a decent-sized group currently tied for the honor cheapest ETF - all of those funds offering broad market or large-cap exposure to U.S. stocks. The SPDR Portfolio Large Cap ETF (NYSEARCA: SPLG ) is one member of that group.

SPLG led a relatively anonymous existence prior to State Street unveiling its core ETF suite last October. Today, SPLG has $1.6 billion in assets under management, nearly $432 million of which flowed into the fund in the fourth quarter and another $882 million has poured into the fund year-to-date .

This cheap ETF tracks the SSGA Large Cap Index, which is designed to capture 90% of the domestic equity market, and holds 755 stocks.

Cheap ETFs: Schwab US Broad Market ETF (SCHB)


Expense ratio:

The Schwab US Broad Market ETF (NYSEARCA: SCHB ) is another member of the club. This cheap ETF tracks the Dow Jones U.S. Broad Stock Market Index. As its name implies, SCHB is a total-market ETF, so its selection universe is not confined to large-cap stocks.

Rather, SCHB features a massive bench of over 2,400 stocks. As a passively managed index fund, SCHB's annual turnover is just 4% , which also helps keep costs low. The fund has slightly trailed the S&P 500 over the past three years despite sector allocations that are mostly in line with those of the benchmark U.S. equity gauge.

Frugal investors can realize additional costs savings with SCHB by trading it commission-free on the company's ETF OneSource platform.

Cheap ETFs: Schwab U.S. Aggregate Bond ETF (SCHZ)


Expense ratio:

No list of cheap ETFs would be complete without some members of the Vanguard stable. Enter the Vanguard Total Stock Market ETF (NYSEARCA: VTI ). Home to over $103 billion in assets under management, VTI is the third-largest U.S.-listed ETF and the largest that does not track the S&P 500 .

Speaking of the S&P 500, VTI has slightly trailed that index over the past three years, but over that span, the Vanguard fund has topped the aforementioned SCHB, a direct VTI rival.

VTI holds 3,654 stocks, giving this cheap one fund one of the largest rosters among domestic equity ETFs. The median market value of those holdings is $64 billion.

Cheap ETFs: SPDR Portfolio Developed World ex-US ETF (SPDW)

iShares Core S&P Total U.S. Stock Market ETF (ITOT)


Expense ratio:

Investors willing to dwell in the expense ratio of 0.05% to 0.1% will find an array of high-quality iShares products spanning myriad asset classes. For the time being, the issuer's cheapest offering is the iShares Core S&P Total U.S. Stock Market ETF (NYSEARCA: ITOT ).

Like other total market ETFs, ITOT is a fine idea for cost-conscious investors looking for buy-and-hold investments and/or diversified exposure to domestic stocks. As a broad market play on U.S. stocks, ITOT is predictably heavily allocated to technology stocks.

A standard deviation of 10.4% and a trailing-12-month dividend yield of 1.7% put ITOT mostly in line with the S&P 500 based on those metrics.

Cheap ETFs: Schwab U.S. Large-Cap Value ETF (SCHV)

Expense ratio:

Total-market ETFs are not the only equity funds that carry low fees. Investors can hone in on growth and value stocks on the cheap thanks to ETFs such as the Schwab U.S. Large-Cap Value ETF (NYSEARCA: SCHV ). SCHV is one of several value ETFs with the nominal fee of . Several growth ETFs also carry the same fee.

Value stocks have struggled against growth rivals for much of the current bull market. Perhaps that means there is value in the value factor, but only time will tell. However, historical data confirm that value stocks usually win in the long run and do so with less volatility than their growth counterparts.

This cheap fund reflects the current value landscape with financial services as its largest sector weight at over 20%. For the speculation that technology is overvalued, the sector does have some prominent spots in value ETFs. SCHV devotes almost 18 percent to large-cap tech stocks.

SCHV has outperformed the S&P 500 Value Index by 470 basis points over the past three years.

Editor's Note: This article was originally published on May 2, 2018. It has since been updated.

As of this writing, Todd Shriber does not own any of the aforementioned securities.

Compare Brokers

The post 7 Really, Really Cheap ETFs appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos


    InvestorPlace is one of America’s largest, longest-standing independent financial research firms. Started over 40 years ago by a business visionary named Tom Phillips, we publish detailed research and recommendations for self-directed investors, financial advisors and money managers.

    Learn More