The Trump Accounts program gives eligible American children a government-funded start in the stock market, with five low-cost ETFs forming the initial investment lineup.
Their expense ratios range from 0.02% to 0.03%. SPYM charges the lowest fee at 0.02%, about $2 per $10,000 invested annually. The other four ETFs charge 0.03%, or about $3 per $10,000.
However, the bigger difference lies in their underlying indexes. SPYM and IVV track the S&P 500 and focus on large-cap U.S. companies. SPTM expands exposure to about 1,500 stocks, while ITOT holds about 2,439. VTI provides exposure to more than 3,500 companies spanning large-, mid-, small- and micro-cap segments.
Historical performance also varies. Based on the supplied Kiplinger comparison, SPYM and IVV each delivered a 15.1% annualized total return over the past decade (As of September), compared with 14.7% for SPTM and 14.5% for ITOT and VTI. These figures reflect past performance and do not predict future returns.
Big Tech Concentration Remains a Key Consideration
Broader market coverage does not necessarily eliminate concentration risk. According to Kiplinger, technology stocks represented nearly 38% of IVV’s portfolio as of August 27, while its 10 largest holdings accounted for more than 35% of assets. Technology exposure was about 36% for SPTM and 35% for ITOT.
Consequently, major companies such as Nvidia Corp (NASDAQ:NVDA), Apple, Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT), Amazon, Inc (NASDAQ:AMZN), Alphabet, Inc (NASDAQ:GOOGL), Meta Platforms, Inc (NASDAQ:META) and Tesla, Inc (NASDAQ:TSLA) remain influential across the lineup.
This concentration has supported returns during periods of mega-cap technology leadership, but it could also amplify losses if market leadership shifts or technology stocks experience a prolonged downturn.
What the ETF Choice Means for Parents
The five ETFs offer low-cost access to U.S. equities, but they differ in how they cover the market. The S&P 500 funds focus on established large-cap companies, while ITOT and VTI extend exposure to thousands of additional businesses.
For parents, the decision involves more than marginal fee differences. It also means considering how much exposure they want to the largest American companies in an account designed for long-term investing.
Children are eligible for a tax-deferred $1,000 federal contribution if they were born between January 1, 2025, and December 31, 2028. Families can also contribute up to $5,000 annually, potentially allowing investments to compound over nearly two decades.
Photo: Shutterstock / ibragimova
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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