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The Zacks Analyst Blog Highlights: BBUS, VTI, SCHB, SCHX and VOO
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For Immediate Release
Chicago, IL – August 26, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: (BBUS - Free Report) , (VTI - Free Report) , (SCHB - Free Report) , SCHX and (VOO - Free Report) .
Here are highlights from Friday’s Analyst Blog:
5 Low-Cost ETFs to Buy When Every Penny Counts
Since the launch of the first ETF about 25 years back, the exchange traded fund industry has attained great heights. There are currently about 2,021 exchange traded products listed in the United States, with almost $3.91 trillion worth of assets under management (read: U.S. ETFs Hit $4 Trillion in AUM: 4 Reasons Behind the Boom).
Investors can access several asset classes through ETFs, which are basically a pool of securities, almost like mutual funds. However, unlike mutual funds, ETFs trade throughout the day like a stock. Also, ETFs are considered less expensive and more tax efficient.
In fact, the ETF approach is less risky than the stock picking approach as the basket method does not have any company-specific concentration risk. But probably no benefit comes for free. So, for a fund-related approach, expense ratio comes into play unlike stocks. It is the yearly fee that all funds charge their buyers.
While there are a number of factors that investors consider before investing in ETFs, cost is an important factor that drives their investment decision. In the long run, cheaper funds can handily outperform expensive ones, at least when other factors remain constant.
Consider an expense ratio of 1%, a fund of $10,000 invested at 8% annual return will grow to $19,672 in 10 years, while the same fund invested at an expense ratio of 0.1% will grow by a higher amount of $21,390. The difference between the returns will zoom on increasing the holding period.
Considering the same parameters, with an expense ratio of 0.1%, a fund of $10,000 will grow to $97,869 in 30 years (at the same 8% rate of return). The same fund will however grow to a much lesser value of $76,123 with an expense ratio of 1%.
And the price war among issuers intensified of late owing to rising competition. For a long period of time, the lowest cost corner was ruled by Charles Schwab and Vanguard. But now other players like BlackRock are resorting to fee cuts to grab market share (read: Vanguard Intensifies ETF Fee War Again).
Against such a backdrop, we have highlighted five ETFs with ultra-low expense ratios that can be considered at the current operating backdrop.
JPMorgan BetaBuilders U.S. Equity ETF – 0.02%
The underlying Morningstar US Target Market Exposure Index is a free float adjusted market capitalization weighted index which consists of equity securities primarily traded in the United States.
Vanguard Total Stock Market ETF– 0.03%
The underlying CRSP US Total Market Index representing nearly 100% of the U.S. investable equity market covers nearly 4,000 constituents across mega, large, small and micro capitalizations.
Schwab U.S. Broad Market ETF– 0.03%
The underlying Dow Jones U.S. Broad Stock Market Index includes the largest 2,500 publicly traded U.S. companies for which pricing information is readily available. The index is a float-adjusted market capitalization weighted index that reflects the shares of securities actually available to investors in the marketplace.
Schwab U.S. Large-Cap ETF – 0.03%
The underlying Dow Jones U.S. Large-Cap Total Stock Market measures all U.S. equity securities. The index includes approximately the largest 750 stocks and is float-adjusted market-capitalization weighted.
Vanguard S&P 500 ETF – 0.03%
The underlying S&P 500 Index measures the performance of the large-capitalization sector of the U.S. equity market.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: BBUS, VTI, SCHB, SCHX and VOO
For Immediate Release
Chicago, IL – August 26, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: (BBUS - Free Report) , (VTI - Free Report) , (SCHB - Free Report) , SCHX and (VOO - Free Report) .
Here are highlights from Friday’s Analyst Blog:
5 Low-Cost ETFs to Buy When Every Penny Counts
Since the launch of the first ETF about 25 years back, the exchange traded fund industry has attained great heights. There are currently about 2,021 exchange traded products listed in the United States, with almost $3.91 trillion worth of assets under management (read: U.S. ETFs Hit $4 Trillion in AUM: 4 Reasons Behind the Boom).
Investors can access several asset classes through ETFs, which are basically a pool of securities, almost like mutual funds. However, unlike mutual funds, ETFs trade throughout the day like a stock. Also, ETFs are considered less expensive and more tax efficient.
In fact, the ETF approach is less risky than the stock picking approach as the basket method does not have any company-specific concentration risk. But probably no benefit comes for free. So, for a fund-related approach, expense ratio comes into play unlike stocks. It is the yearly fee that all funds charge their buyers.
While there are a number of factors that investors consider before investing in ETFs, cost is an important factor that drives their investment decision. In the long run, cheaper funds can handily outperform expensive ones, at least when other factors remain constant.
Consider an expense ratio of 1%, a fund of $10,000 invested at 8% annual return will grow to $19,672 in 10 years, while the same fund invested at an expense ratio of 0.1% will grow by a higher amount of $21,390. The difference between the returns will zoom on increasing the holding period.
Considering the same parameters, with an expense ratio of 0.1%, a fund of $10,000 will grow to $97,869 in 30 years (at the same 8% rate of return). The same fund will however grow to a much lesser value of $76,123 with an expense ratio of 1%.
And the price war among issuers intensified of late owing to rising competition. For a long period of time, the lowest cost corner was ruled by Charles Schwab and Vanguard. But now other players like BlackRock are resorting to fee cuts to grab market share (read: Vanguard Intensifies ETF Fee War Again).
Against such a backdrop, we have highlighted five ETFs with ultra-low expense ratios that can be considered at the current operating backdrop.
JPMorgan BetaBuilders U.S. Equity ETF – 0.02%
The underlying Morningstar US Target Market Exposure Index is a free float adjusted market capitalization weighted index which consists of equity securities primarily traded in the United States.
Vanguard Total Stock Market ETF– 0.03%
The underlying CRSP US Total Market Index representing nearly 100% of the U.S. investable equity market covers nearly 4,000 constituents across mega, large, small and micro capitalizations.
Schwab U.S. Broad Market ETF – 0.03%
The underlying Dow Jones U.S. Broad Stock Market Index includes the largest 2,500 publicly traded U.S. companies for which pricing information is readily available. The index is a float-adjusted market capitalization weighted index that reflects the shares of securities actually available to investors in the marketplace.
Schwab U.S. Large-Cap ETF – 0.03%
The underlying Dow Jones U.S. Large-Cap Total Stock Market measures all U.S. equity securities. The index includes approximately the largest 750 stocks and is float-adjusted market-capitalization weighted.
Vanguard S&P 500 ETF – 0.03%
The underlying S&P 500 Index measures the performance of the large-capitalization sector of the U.S. equity market.
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 >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.