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The ETF industry is seeing explosive growth piling up huge assets in recent years. As per ETFGI, total assets in ETFs and ETPs listed globally reached a record $8.56 trillion at the end of the first quarter. This is especially thanks to their unique strategies, creativity, transparency, diversification benefits, enhanced tax competences, low turnover and of course low cost.
While there are several types of cost associated with ETFs like trading commissions, bid/ask spreads, premiums and discounts, and tracking error, expense ratios has been the biggest crowd pullers in the ETF world. In fact, price war has been an ongoing theme in the ETF space over the past few years. It is now on high gear with most of the ETFs having an expense ratio of zero or below zero. This is especially true as ETFs with low expense ratios significantly outperform their expensive counterparts when other factors remain constant. This can be explained by the following example (see: all the ETFs with Low Expense Ratios here).
Consider two funds with expense ratios of 0.10% and 0.50% and invest $10,000 in both. Now, both funds have delivered the same annual returns of 10% in 10 years. The fund with an expense ratio of 0.10% will grow to $25,703 in 10 years while the same fund with 0.50% in expense ratio will grow by a lower amount of $24,782 in the same time frame. Further, the difference in total returns (after expenses) becomes more significant if we increase the holding period. The same funds with an expense ratio of 0.10% and 0.50% when invested for 30 years would have a value of $169,797 and $152,203, respectively, after 30 years.
Keeping the importance of expense ratio in mind, we have highlighted the 25 cheapest ETFs currently on the market and have AUM of more than $50 million:
BNY Mellon US Large Cap Core Equity ETF BKLC – Expense ratio: 0.00%
This ETF provides investors with broad exposure to large-capitalization stocks and follows the Morningstar U.S. Large Cap Index. It holds 200 stocks in its basket and has amassed $308.5 million since its debut in April 2020. The product trades in an average daily volume of 17,000 shares a day.
This ETF offers exposure to the 500 largest U.S. companies as measured by market capitalization and uses a composite growth score to adjust companies’ weightings. It follows the Solactive SoFi US 500 Growth Index. The fund has amassed $243.4 million in its asset base while trades in an average daily volume of 91,000 shares. It has a Zacks ETF Rank #2 (Buy) (read: 5 ETFs Under $20 Set to Outperform).
JPMorgan BetaBuilders U.S. Equity ETF BBUS – Expense ratio: 0.02%
It offers exposure to 594 U.S. large and mid-cap equities by tracking the Morningstar US Target Market Exposure Index. It has AUM of $545.9 million and trades in an average daily volume of 51,000 shares.
This is the second-largest fund in the space with AUM of $279.4 billion and tracks the S&P 500 Index. It holds 505 securities in its basket and trades in a heavy volume of 4 million shares per day on average. IVV has a Zacks ETF Rank #2 with a Medium risk outlook.
This ETF follows the CRSP US Total Market Index, offering broad exposure across growth and value styles. Holding 3781 stocks, it is the third largest and most-popular fund with AUM of nearly $246.4 billion and an average daily volume of nearly 3.8 million shares. VTI has a Zacks ETF Rank #2 with a Medium risk outlook (read: Record Inflows to U.S. ETFs This Year: 6 Winners).
This is another low-cost well-diversified, large-cap fund tracking the S&P 500 Index and holding 507 securities in its basket. The fund trades in volume of about 3.7 million shares a day and has AUM of $227.7 billion. It has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares Core S&P Total U.S. Stock Market ETF ITOT – Expense ratio: 0.03%
This ETF also offers the total U.S. stock market, ranging from some of the smallest to largest companies and tracks the S&P Total Market Index. It holds a larger basket of 3,596 stocks and has AUM of $39.5 billion. The fund trades in an average daily volume of 1.5 million shares. The fund has a Zacks ETF Rank #2 with a Medium risk outlook.
Schwab U.S. Large-Cap ETF SCHX – Expense ratio: 0.03%
This fund follows the Dow Jones U.S. Large-Cap Total Stock Market Index, holding 772 securities in its basket. It has amassed $30.1 billion in its asset base and trades in volume of more than 757,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook (read: Top-Ranked ETFs to Buy as S&P 500 Nears Record High).
This fund provides broad exposure to the U.S. equity market by tracking the Dow Jones U.S. Broad Stock Market Index. It holds a well-diversified portfolio of 2,575 stocks. SCHB is one of the popular and liquid ETF with AUM of $21.1 billion and an average daily volume of 466,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook
This fund also follows the S&P 500 Index and holds 505 stocks in its basket. It has amassed $10.4 billion in its asset base and trades in solid volume of 2.1 million shares a day on an average. It has a Zacks ETF Rank #2.
This fund offers exposure to the broad market by tracking the S&P Composite 1500 Index, holding 1,523 stocks in its basket. It has AUM of $5.1 billion and trades in an average daily volume of 347,000 shares. The product has a Zacks ETF Rank #2 (read: 5 High Beta ETFs That Are in High Momentum).
iShares Morningstar U.S. Equity ETF ILCB – Expense ratio: 0.03%
This product tracks the Morningstar US Large-Mid Cap Index, holding 703 stocks in its basket. It has accumulated $888.3 million and trades in an average daily volume of 21,000 shares. The fund has a Zacks ETF Rank #3 (Hold).
This fund offers exposure to U.S. Treasury bonds with remaining maturities less than or equal to three months. It holds 8 bonds in its basket with average maturity and effective duration of 0.09 years each. SGOV has gathered $745.2 million in its asset base while trades in an average daily volume of 38,000 shares. It has a Zacks ETF Rank #3.
Vanguard Total Bond Market ETF (BND - Free Report) – Expense ratio: 0.03%
This ETF targets the broad U.S. investment grade bond market by tracking the Bloomberg Barclays U.S. Aggregate Float Adjusted Index. It holds 10156 securities in its basket with Treasury taking the top spot at 42.7%. Government mortgage-backed bond and industrial corporates account for 20.7% and 17.8%, respectively. The average maturity and average duration come in at 8.5 years and 6.6 years, respectively. BND is the second-largest bond ETF with AUM of $76.9 billion and an average daily volume of 5.3 million shares.
iShares Core U.S. Aggregate Bond ETF (AGG - Free Report) – Expense ratio: 0.04%
This find also offers broad exposure to U.S. investment-grade bonds and follows the Bloomberg Barclays US Aggregate Bond Index. It holds a broad basket of 9,620 bonds with average maturity of 8.20 years and effective duration of 6.47 years. AGG is the largest and most-liquid bond ETF with AUM of $87.8 billion and an average daily volume of 4.8 million shares.
This is another large-cap ETF that follows the CRSP US Large Cap Index and holds a well-diversified 582 stocks in its basket. The fund has AUM of $24.1 billion and trades in an average daily volume of 206,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
This product offers exposure to the 1,834 small-cap stocks and tracks the Dow Jones U.S. Small-Cap Total Stock Market Index. The ETF has AUM of $16.5 billion and sees a solid volume of more than 401,000 shares a day. It has a Zacks ETF Rank #2 (read: 5 Small-Cap Sector ETFs Leading the Russell 2000 Rally).
This fund offers exposure to the mid-cap segment of the broad U.S. stock market by tracking the CRSP US Mid Cap Index and holds 366 stocks. The ETF has amassed $49.3 billion in its asset base while trades in an average daily volume of 551,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
This ETF targets the growth segment and follows the CRSP US Large Cap Growth Index, holding 278 stocks in its basket. It has AUM of $74.6 billion and an average daily volume of 762,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
This targets the value segment and follows the CRSP US Large Cap Value Index, holding 338 stocks in its basket. VTV has AUM of $83 billion and an average daily volume of 2.8 million shares. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Schwab U.S. Large-Cap Growth ETF SCHG – Expense ratio: 0.04%
This product also offers exposure to the growth segment of the large-cap space by tracking the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. It holds 236 stocks with AUM of 14.5 billion and an average daily volume of around 358,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
Schwab U.S. Large-Cap Value ETF (SCHV - Free Report) – Expense ratio: 0.04%
This is also a large-cap centric fund that targets the value segment by tracking the Dow Jones U.S. Large-Cap Value Total Stock Market Index. It holds 541 stocks in its basket and has amassed assets worth $9.9 billion. The fund trades in volume of around 432,000 shares a day on average and has a Zacks ETF Rank #1 with a Medium risk outlook.
SPDR S&P 500 Value ETF SPYV – Expense ratio: 0.04%
With AUM of $13 billion, this ETF follows the S&P 500 Pure Value Index, holding 433 securities in its basket. It trades in a solid average daily volume of 3.1 million shares and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Bet on These Top Value ETFs Now).
This is another option targeting growth corner of the large-cap segment. It follows the S&P 500 Growth Index, holding 239 stocks in its basket. The ETF has AUM of $10.6 billion in its asset base and trades in an average daily volume of 1.5 million shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
This ETF offers exposure to mid-cap segment of the broad market and tracks the Dow Jones U.S. Mid-Cap Total Stock Market Index. It holds 522 securities in its basket with AUM of $9.7 billion and an average daily volume of 282,000 shares. The product has a Zacks ETF Rank #3 with a Medium risk outlook.
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A Quick Guide to the 25 Cheapest ETFs
The ETF industry is seeing explosive growth piling up huge assets in recent years. As per ETFGI, total assets in ETFs and ETPs listed globally reached a record $8.56 trillion at the end of the first quarter. This is especially thanks to their unique strategies, creativity, transparency, diversification benefits, enhanced tax competences, low turnover and of course low cost.
While there are several types of cost associated with ETFs like trading commissions, bid/ask spreads, premiums and discounts, and tracking error, expense ratios has been the biggest crowd pullers in the ETF world. In fact, price war has been an ongoing theme in the ETF space over the past few years. It is now on high gear with most of the ETFs having an expense ratio of zero or below zero. This is especially true as ETFs with low expense ratios significantly outperform their expensive counterparts when other factors remain constant. This can be explained by the following example (see: all the ETFs with Low Expense Ratios here).
Consider two funds with expense ratios of 0.10% and 0.50% and invest $10,000 in both. Now, both funds have delivered the same annual returns of 10% in 10 years. The fund with an expense ratio of 0.10% will grow to $25,703 in 10 years while the same fund with 0.50% in expense ratio will grow by a lower amount of $24,782 in the same time frame. Further, the difference in total returns (after expenses) becomes more significant if we increase the holding period. The same funds with an expense ratio of 0.10% and 0.50% when invested for 30 years would have a value of $169,797 and $152,203, respectively, after 30 years.
Keeping the importance of expense ratio in mind, we have highlighted the 25 cheapest ETFs currently on the market and have AUM of more than $50 million:
BNY Mellon US Large Cap Core Equity ETF BKLC – Expense ratio: 0.00%
This ETF provides investors with broad exposure to large-capitalization stocks and follows the Morningstar U.S. Large Cap Index. It holds 200 stocks in its basket and has amassed $308.5 million since its debut in April 2020. The product trades in an average daily volume of 17,000 shares a day.
SoFi Select 500 ETF (SFY - Free Report) – Expense ratio: 0.00%
This ETF offers exposure to the 500 largest U.S. companies as measured by market capitalization and uses a composite growth score to adjust companies’ weightings. It follows the Solactive SoFi US 500 Growth Index. The fund has amassed $243.4 million in its asset base while trades in an average daily volume of 91,000 shares. It has a Zacks ETF Rank #2 (Buy) (read: 5 ETFs Under $20 Set to Outperform).
JPMorgan BetaBuilders U.S. Equity ETF BBUS – Expense ratio: 0.02%
It offers exposure to 594 U.S. large and mid-cap equities by tracking the Morningstar US Target Market Exposure Index. It has AUM of $545.9 million and trades in an average daily volume of 51,000 shares.
iShares Core S&P 500 ETF (IVV - Free Report) – Expense ratio: 0.03%
This is the second-largest fund in the space with AUM of $279.4 billion and tracks the S&P 500 Index. It holds 505 securities in its basket and trades in a heavy volume of 4 million shares per day on average. IVV has a Zacks ETF Rank #2 with a Medium risk outlook.
Vanguard Total Stock Market ETF (VTI - Free Report) – Expense ratio: 0.03%
This ETF follows the CRSP US Total Market Index, offering broad exposure across growth and value styles. Holding 3781 stocks, it is the third largest and most-popular fund with AUM of nearly $246.4 billion and an average daily volume of nearly 3.8 million shares. VTI has a Zacks ETF Rank #2 with a Medium risk outlook (read: Record Inflows to U.S. ETFs This Year: 6 Winners).
Vanguard S&P 500 (VOO - Free Report) – Expense ratio: 0.03%
This is another low-cost well-diversified, large-cap fund tracking the S&P 500 Index and holding 507 securities in its basket. The fund trades in volume of about 3.7 million shares a day and has AUM of $227.7 billion. It has a Zacks ETF Rank #2 with a Medium risk outlook.
iShares Core S&P Total U.S. Stock Market ETF ITOT – Expense ratio: 0.03%
This ETF also offers the total U.S. stock market, ranging from some of the smallest to largest companies and tracks the S&P Total Market Index. It holds a larger basket of 3,596 stocks and has AUM of $39.5 billion. The fund trades in an average daily volume of 1.5 million shares. The fund has a Zacks ETF Rank #2 with a Medium risk outlook.
Schwab U.S. Large-Cap ETF SCHX – Expense ratio: 0.03%
This fund follows the Dow Jones U.S. Large-Cap Total Stock Market Index, holding 772 securities in its basket. It has amassed $30.1 billion in its asset base and trades in volume of more than 757,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook (read: Top-Ranked ETFs to Buy as S&P 500 Nears Record High).
Schwab U.S. Broad Market ETF (SCHB - Free Report) – Expense ratio: 0.03%
This fund provides broad exposure to the U.S. equity market by tracking the Dow Jones U.S. Broad Stock Market Index. It holds a well-diversified portfolio of 2,575 stocks. SCHB is one of the popular and liquid ETF with AUM of $21.1 billion and an average daily volume of 466,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook
SPDR Portfolio S&P 500 ETF SPLG – Expense ratio: 0.03%
This fund also follows the S&P 500 Index and holds 505 stocks in its basket. It has amassed $10.4 billion in its asset base and trades in solid volume of 2.1 million shares a day on an average. It has a Zacks ETF Rank #2.
SPDR Portfolio S&P 1500 Composite Stock Market ETF SPTM – Expense ratio: 0.03%
This fund offers exposure to the broad market by tracking the S&P Composite 1500 Index, holding 1,523 stocks in its basket. It has AUM of $5.1 billion and trades in an average daily volume of 347,000 shares. The product has a Zacks ETF Rank #2 (read: 5 High Beta ETFs That Are in High Momentum).
iShares Morningstar U.S. Equity ETF ILCB – Expense ratio: 0.03%
This product tracks the Morningstar US Large-Mid Cap Index, holding 703 stocks in its basket. It has accumulated $888.3 million and trades in an average daily volume of 21,000 shares. The fund has a Zacks ETF Rank #3 (Hold).
iShares 0-3 Month Treasury Bond ETF SGOV - Expense ratio: 0.03%
This fund offers exposure to U.S. Treasury bonds with remaining maturities less than or equal to three months. It holds 8 bonds in its basket with average maturity and effective duration of 0.09 years each. SGOV has gathered $745.2 million in its asset base while trades in an average daily volume of 38,000 shares. It has a Zacks ETF Rank #3.
Vanguard Total Bond Market ETF (BND - Free Report) – Expense ratio: 0.03%
This ETF targets the broad U.S. investment grade bond market by tracking the Bloomberg Barclays U.S. Aggregate Float Adjusted Index. It holds 10156 securities in its basket with Treasury taking the top spot at 42.7%. Government mortgage-backed bond and industrial corporates account for 20.7% and 17.8%, respectively. The average maturity and average duration come in at 8.5 years and 6.6 years, respectively. BND is the second-largest bond ETF with AUM of $76.9 billion and an average daily volume of 5.3 million shares.
iShares Core U.S. Aggregate Bond ETF (AGG - Free Report) – Expense ratio: 0.04%
This find also offers broad exposure to U.S. investment-grade bonds and follows the Bloomberg Barclays US Aggregate Bond Index. It holds a broad basket of 9,620 bonds with average maturity of 8.20 years and effective duration of 6.47 years. AGG is the largest and most-liquid bond ETF with AUM of $87.8 billion and an average daily volume of 4.8 million shares.
Vanguard Large-Cap ETF (VV - Free Report) – Expense ratio: 0.04%
This is another large-cap ETF that follows the CRSP US Large Cap Index and holds a well-diversified 582 stocks in its basket. The fund has AUM of $24.1 billion and trades in an average daily volume of 206,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
Schwab U.S. Small-Cap ETF (SCHA - Free Report) – Expense ratio: 0.04%
This product offers exposure to the 1,834 small-cap stocks and tracks the Dow Jones U.S. Small-Cap Total Stock Market Index. The ETF has AUM of $16.5 billion and sees a solid volume of more than 401,000 shares a day. It has a Zacks ETF Rank #2 (read: 5 Small-Cap Sector ETFs Leading the Russell 2000 Rally).
Vanguard Mid-Cap ETF VO – Expense ratio: 0.04%
This fund offers exposure to the mid-cap segment of the broad U.S. stock market by tracking the CRSP US Mid Cap Index and holds 366 stocks. The ETF has amassed $49.3 billion in its asset base while trades in an average daily volume of 551,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
Vanguard Growth ETF VUG – Expense ratio: 0.04%
This ETF targets the growth segment and follows the CRSP US Large Cap Growth Index, holding 278 stocks in its basket. It has AUM of $74.6 billion and an average daily volume of 762,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
Vanguard Value ETF (VTV - Free Report) – Expense ratio: 0.04%
This targets the value segment and follows the CRSP US Large Cap Value Index, holding 338 stocks in its basket. VTV has AUM of $83 billion and an average daily volume of 2.8 million shares. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
Schwab U.S. Large-Cap Growth ETF SCHG – Expense ratio: 0.04%
This product also offers exposure to the growth segment of the large-cap space by tracking the Dow Jones U.S. Large-Cap Growth Total Stock Market Index. It holds 236 stocks with AUM of 14.5 billion and an average daily volume of around 358,000 shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
Schwab U.S. Large-Cap Value ETF (SCHV - Free Report) – Expense ratio: 0.04%
This is also a large-cap centric fund that targets the value segment by tracking the Dow Jones U.S. Large-Cap Value Total Stock Market Index. It holds 541 stocks in its basket and has amassed assets worth $9.9 billion. The fund trades in volume of around 432,000 shares a day on average and has a Zacks ETF Rank #1 with a Medium risk outlook.
SPDR S&P 500 Value ETF SPYV – Expense ratio: 0.04%
With AUM of $13 billion, this ETF follows the S&P 500 Pure Value Index, holding 433 securities in its basket. It trades in a solid average daily volume of 3.1 million shares and has a Zacks ETF Rank #2 with a Medium risk outlook (read: Bet on These Top Value ETFs Now).
SPDR S&P 500 Growth ETF SPYG – Expense ratio: 0.04%
This is another option targeting growth corner of the large-cap segment. It follows the S&P 500 Growth Index, holding 239 stocks in its basket. The ETF has AUM of $10.6 billion in its asset base and trades in an average daily volume of 1.5 million shares. It has a Zacks ETF Rank #2 with a Medium risk outlook.
Schwab U.S. Mid-Cap ETF (SCHM - Free Report) - Expense ratio: 0.04%
This ETF offers exposure to mid-cap segment of the broad market and tracks the Dow Jones U.S. Mid-Cap Total Stock Market Index. It holds 522 securities in its basket with AUM of $9.7 billion and an average daily volume of 282,000 shares. The product has a Zacks ETF Rank #3 with a Medium risk outlook.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>