Best Low Expense Ratio ETFs Right Now

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Contributor, Benzinga
June 27, 2023

If you are new to investing, the stock market can be your financial gateway to seek better returns on your money. More than 8,000 companies are listed on major stock exchanges, making it a challenge to decide which stocks you want to put your money behind. But with ETFs, you can buy into a bulk of the market in a single trade and at low costs.  That's why it's important to learn about low-expense ratio ETFs.

An ETF holds assets such as stocks, commodities, securities, real estate and bonds while tracking benchmark indices with hundreds of underlying companies. These ETFs will charge you a small fee annually, also known as expense ratios, to cover the cost of fund management and other operations. 

For example, you can buy a single share of JPMorgan U.S. Aggregate Bond ETF (NASDAQ: JAGG) at an expense ratio of 0.07%. This means you will be charged $7 per year for every $10,000 you invest in the JPMorgan Bond ETF.  

Here is Benzinga's list of the best low expense ratio ETFs.

Quick Look at the Best Low Expense Ratio ETFs:

Low-Expense Ratio ETFs Biggest Gainers and Losers

Stay on top of the best and worst-performing low-expense ratio ETFs on the stock exchange.  

Stock Movers

Session: Jun 17, 2024 4:00PM EDT - Jun 18, 2024 3:59PM EDT

Premarket Low-Expense Ratio ETFs

Here are the positions of these ETFs before the stock exchange opens to help you make better price movement predictions. 

Aftermarket Low Expense Ratio ETFs

Below are the quotes of low-expense ratio ETFs after trading hours on the stock exchange are closed. 

Stock Movers

Loser

TickerCompany±%Buy Stock
VIGVanguard Div Appreciation ETF$182.41-1.46%748.4KBuy/Sell
VEAVanguard FTSE Developed Markets ETF$49.48-0.8%10.2MBuy/Sell
VYMVanguard High Dividend Yield ETF$119.71-0.09%862.9KBuy/Sell
Get in real-time
Session: Jun 18, 2024 4:00PM EDT - Jun 18, 2024 7:59PM EDT

Why Invest in These ETFs?

Here are the top 3 reasons you should consider investing in low-expense ratio ETFs. 

1. Low expense ratio ETFs are cheaper than mutual funds.

ETFs and mutual funds are 2 of the most promising financial products in the stock market. Although both of these investment options charge you an expense ratio, ETFs are generally cheaper than mutual funds. 

There are only a handful of mutual funds with an expense ratio less than 1%, while you can choose to invest in over 100 ETFs that charge you an expense ratio of 0.02% - 0.07%. This is because mutual funds need a team of professionals including equity analysts, fund managers and chartered accountants to run smoothly. ETFs can be passively managed with less effort by mirroring a benchmark index.  

2. Low-expense ratio ETFs can diversify your portfolio. 

ETFs give you an opportunity to invest in a wide variety of industrial sectors and asset classes at incredibly low costs. Depending on your financial needs, you can also invest in domestic or global ETFs that can be traded at low-expense ratios. These affordable ETFs can instantly diversify your financial portfolio by letting you own shares in hundreds of penny stock, small-cap, mid-cap and large-cap companies with a single trade.  

For example, by investing $10,000 in Vanguard S&P 500 ETF (NASDAQ: VOO), you can own $8,834 worth of shares in large-cap companies, $1,049 worth of shares in mid-cap companies, $112 worth of shares in small-cap companies and $4 worth of shares in micro-cap companies. All of this is at a low-expense ratio of 0.03% or $3 per year. 

3. Low-expense ratio ETFs yield more returns in the long run. 

ETFs with low-expense ratios are beneficial for long-term investors. If you are an investor who likes to buy and hold investments for several years to let it grow, high-expense ratios can slowly eat away at your returns. 

The compounding effect of high-expense ratios on ETFs can deduct a huge chunk of your returns. Let’s say you made a $10,000 investment in an ETF with an expense ratio of 2%. At a constant return rate of 10% per year, you would lose $200 on your net gain of $1,000 in the 1st year. In 5 years, you would lose $1,363 on your $6,105 profit. In 10 years, you would lose $4,043 on your $15,937 profit. 

On the other hand, imagine you made a $10,000 investment in an ETF with a low-expense ratio of 0.5%. At a constant return rate of 10% per year, you would only lose $50 on your net gain of $1,000 in the 1st year. In 5 years, you would lose $366 on your $6,105 profit. In 10 years, you would lose $1,179 on your $15,937 profit. Comparatively, between these 2 ETFs, your profits would be up by 28.64% with the lower expense ratio ETF.  

Top 3 Low expense ratio ETFs by AUM

ETFs with low expense ratios are cost-effective trades for both short-term and long-term investment strategies. But it is not the only factor that can affect the outcome of your investments. 

Before you invest in ETFs, you should also consider the performance of benchmark indices, historical return records, trade volumes and total assets under management (AUM). Check out these low-expense ratio ETFs to get you started.  

1. Fidelity MSCI Information Technology Index ETF (NASDAQ: FTEC)

Fidelity MSCI Information Technology Index ETF has a low-expense ratio of 0.08%. It tracks the MSCI USA IMI Information Technology Index and holds assets in more than 300 tech firms. 

Launched in 2013, Fidelity MSCI Information Technology Index ETF has a total AUM of $3 billion. It has an annual dividend rate of $0.85. This ETF is highly liquid with an average daily trade volume of 447,900 shares. Fidelity MSCI Information Technology Index ETF has a 1-year return rate of 11.13% and a 5-year return rate of 122.97%.

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2. Vanguard Information Technology ETF (NASDAQ: VGT)

Vanguard Information Technology ETF has been on the market since 2004. It corresponds to the MSCI U.S. Investable Market Information Technology 25/50 Index and offers exposure to companies in the information technology industry. 

Vanguard Information Technology ETF has a total AUM of $24 billion. It has a low-expense ratio of 0.10% and trades over 1 million shares every day. You can earn $2.96 per share as annual dividends on this investment. Vanguard Information Technology ETF has a 1-year return rate of 11.14% and a 5-year return rate of 129.22%. 

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3. Technology Select Sector SPDR Fund (NASDAQ: XLK)

Technology Select Sector SPDR Fund mirrors the Technology Select Sector Index with underlying companies that deal with wireless telecommunication services and semiconductors. It has a low expense ratio of 0.13%. 

Technology Select Sector SPDR Fund trades more than 11 million shares per day. It has a total AUM of $25 billion with an annual dividend rate of $1.20. Technology Select Sector SPDR Fund has a 1-year return rate of 14.49% and a 5-year return rate of 125.44%. 

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Best Online Brokers for Low-Expense Ratio ETFs

An online broker helps you compare the top ETFs and invest in major stock exchanges. Take a look at some of the best online brokers in the market. 

Self Direct Investment by JP Morgan
Best For
  • Chase Customers
securely through Self Direct Investment by JP Morgan's website

1. You Invest by JP Morgan

Chase You Invest is an online broker that helps you invest with the expertise of J.P. Morgan. You can open a You Invest Trade account with a $0 minimum deposit or a You Invest Portfolio account with a $500 minimum deposit.

You can research, trade and manage your investments online with Chase You Invest. It is regulated by the Financial Industry Regulatory Authority (FINRA). 

Firstrade
Best For
  • Mobile Investing
securely through Firstrade's website

2. Firstrade

You can invest in the full suite of financial products such as stocks, ETFs, options, fixed income and mutual funds on Firstrade. There is no minimum amount deposit required to open an account. 

Firstrade lets you trade on the go with its Android and iPhone mobile application. You can access comprehensive reports from Morningstar, Briefing.com, Zacks and Benzinga through this platform. Firstrade is regulated by FINRA.

TD Ameritrade
Best For
  • Forex and investing app
securely through TD Ameritrade's website

3. TD Ameritrade

TD Ameritrade is an intuitive online broker that lets you trade commission-free on the platform. You can open a new account on the platform with no minimum deposit.

TD Ameritrade’s powerful trading tools help you make smarter investments. You can browse through 400,000 data points from across the globe to discover key indicators of successful trades. TD Ameritrade is regulated by FINRA. 

Spend Less, Earn More

Low-expense ratios can provide you with affordable entries into ETFs. If you’re a long-term investor, you can earn substantial profits from return rates and dividends on your investment. These ETFs also trade in high volumes throughout the year, making it easier for you to find buyers as an exit strategy.  

Frequently Asked Questions

Q

What are ETFs?

A

ETFs are a bundle of stocks, bonds, real estate and other asset classes.

Q

Why low espense ratio ETFs?

A

Low expense ratio ETFs are a great way to diversify your portfolio and invest with less fees.

Q

What are the best low expense ratio ETFs?

A

Benzinga provides a list of the best low expense ratio ETFs above.