Wall Street’s major exchange-traded fund (ETF) providers are benefiting from a rising tide of investor money, with ETF assets surpassing the $3 trillion mark in July thanks to a robust month’s worth of inflows. But these gains haven’t been easily made — ETF providers are scratching and clawing away at their own fees, creating a growing pile of extremely cheap index funds.
That’s great news for the “little guy.”
Individual investors now have their choice of cheap index funds, with literally dozens of ETFs providing broad exposure to stocks, bonds and other assets for literally fractions of a penny on the dollar. That’s important, as saving even a couple basis points in expenses can add up to big returns when compounded over several decades.
Some funds are worth larger fees because they produce far superior returns. But if you’re evaluating several similar ETFs, and all else is equal, it pays to go with the cheaper fund. Just consider this hypothetical example of two funds providing the same return, but with a difference of just 10 basis points in fees:
If you’re only starting to put together your portfolio, or you’re looking to replace some of your more expensive holdings, you can start your search with this list of seven dirt-cheap index funds — most of which charge less than $10 a year on a $10,000 investment — that provide exposure to some of the most common and important investment types on the market.
In no particular order, here they are: