Build a Portfolio of Low-Cost ETFs for the Year Ahead | ETF Trends

After a record-setting rally, ETF investors should can still stay invested, but it is also important to manage their portfolio and expectations for the new year.

Matthew Bartolini, head of SPDR Americas Research at State Street Global Advisors, argued that going into 2020, investors should stay invested while limiting risk, Investor’s Business Daily reports.

“After such a great run, today’s risks seem more heavily skewed to the downside. We would caution investors who may be attempting to squeeze out those last few points of return or incremental yield,” Bartolini said in a report. “It may not be worth the risk.”

Consequently, investors should consider cheap ETF options that provide broad market exposure to help diversify a portfolio across asset classes.

“As we enter the 2020s, indexing and ETFs are no longer a side show, they’ve become the main event,” Ben Johnson, Morningstar’s director of global exchange traded fund research, told Investor’s Business Daily. “To the extent that this has resulted in significant cost savings for investors, this is something to celebrate.”

Investors can find a number of dirt-cheap ETFs to help keep them invested while limiting the potential drag from fees. For example, SoFi Invest offers two ETFs that have currently waived their fees altogether, including the SoFi Select 500 ETF (SFY) and the SoFi Next 500 ETF (SFYX).

Alternatively, investors can go with the traditional route with broad or plain vanilla index-based ETFs that come with low expense ratios. The JPMorgan BetaBuilders U.S. Equity ETF (BBUS) is among the cheapest with a 0.02% expense ratio, providing simple, affordable access to U.S. large and mid-cap equities.

Other broad U.S. stock market ETFs include the Vanguard 500 Index (NYSEARCA: VOO), SPDR Portfolio Total Stock Market ETF (NYSEArca: SPTM) and Schwab U.S. Large-Cap ETF (NYSEArca: SCHX), which all show a 0.03% expense ratio.

Investors can also diversify into foreign markets with cheap ETF options as well. For instance, e SPDR Portfolio Developed World ex-US ETF (SPDW) comes with a 0.04% expense ratio and the Vanguard FTSE Developed Markets ETF (VEA) has a 0.05% expense ratio.