ETF Trends
ETF Trends

Times are tight. We’re all looking for a bargain at the grocery store, on the car lot, at the mall and just about everywhere else. But why stop there? You can go bargain-hunting with exchange traded funds (ETFs), too.

If you take $500,000 and invested this money into a low-cost index fund or an index ETF, with an annual cost of 0.35% for an expense ratio, fund expenses over 20 years would be $36,188. Ron DeLegge for ETF Guide shows us that a mutual fund would incur much more in expenses, with brokerage costs, management fees, sales loads and taxes, totaling up to $300,000.

Here are five ETFs that are from the five key fund categories, with the lowest costs:

  • iShares S&P GSCI Commodity Indexed Trust (GSG): The expense ratio is 0.75% and includes areas such as energy,  industrial metals, agriculture, livestock and precious metals.
  • SPDR’s nine sector ETFs: All nine of the specific sector focused Spiders are 0.65%. Financials (XLF) and Health Care (XLV) are a few. SPDR lowered their fees recently.
  • Vanguard Total Bond Market (BND): Comes with much lower fees than a bond fund at 0.11%.
  • Vanguard Emerging Markets (VWO): With an expense ratio of 0.25%, need we say more?
  • Vanguard Total Stock Market (VTI): A good, low-cost, U.S. stock market fund, this ETF covers the range of asset classes.

Low fees are a great sign of some healthy competition in the ETF industry. As ETFs grow in popularity, this is probably something we’ll be seeing a lot more of. It all serves to benefit the investor.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.