Earlier we read about the three costliest ETFs regarding their expense ratio. In this article, we will know the three cheapest ETFs regarding their expense ratio.
Two of the most successful long-term investment vehicles are mutual funds and exchange-traded funds (ETFs). You may even have some of these in your pension fund.
However, a part of your portfolio is dedicated to a charge termed an expense ratio each year. It’s critical to understand the costs you’re paying no matter what you’re investing in.
And, given the prevalence of mutual funds and exchange-traded funds (ETFs), many of us pay an annual expense ratio out of our portfolios.
What is an Expense Ratio?
The fee that mutual funds or exchange-traded funds charge investors is the Expense ratio. This charge covers the costs of management, asset allocation, marketing, and other services.
These charges are calculated as a portion of an investor’s annual cost. ETF expense rates are often less than 1%. That means you spend less than $1 per year on expenses for every $100 you invest.
Three cheapest ETFs in terms of their expense ratio
| Rank | ETF | Symbol | Expense Ratio |
| 1 | JP Morgan Betabuilders U.S. Equity ETF | BBUS | 0.02% |
| 2 | Vanguard Total Stock Market ETF | VTI | 0.03% |
| 3 | iShares Core S&P 500 ETF | IVV | 0.03% |
1. JP Morgan Betabuilders U.S. Equity ETF
BBUS invests in the top 85% of stocks in the US equity market by market capitalization across all sectors. The fund includes large-cap and mid-cap stocks.
Common shares, preferred shares, and REITs are forms of equity securities. BBUS, part of the “BetaBuilders” suite, offers low-cost, plain-vanilla access to US stocks, except for small-cap enterprises, which can be used as a primary investment or complement BBMC or BBIN.
The fund might invest up to 20% in futures to track the index more closely. The index recalibration is done every three months. The MSCI ESG Fund Rating for JPMorgan BetaBuilders U.S. Equity ETF is AA, with 7.61 out of ten
Performance
| Performance [as of 18/03/22] | 1 year | 3 years | 5 years | 10 years |
| BBUS | 10.62% | 17.92% | – | – |
| MSCI USA IMI | 12.14% | 17.85% | 15.10% | 14.24% |
The fund invests entirely in the United States.
Top 10 Holdings
BBUS details
| Brand | JPMorgan |
| Expense Ratio | 0.02% |
| YTD Return | -7.79% |
| AUM | $1.05B |
| Number of Holdings | 632 |
| Avg. Spread ($) | $0.04 |
| Average Daily $ Volume | $8.51M |
2. Vanguard Total Stock Market ETF
VTI is a strong option for buyers or investors looking for broad equity exposure across the market, including micro-caps. The fund is impartial, with no gambles on businesses, sizes, or styles.
The fund is handled passively and is always fully invested. The ETF has tracked various broad indexes over the years, including Dow Jones, MSCI, and, as of June 2013, CRSP. Its current index closely resembles the MSCI benchmark.
Like all other Vanguard ETFs, portfolio transparency is reported monthly rather than daily. The MSCI ESG Fund Rating for Vanguard Total Stock Market ETF is AA, with 7.36 out of 10.
Performance
| Performance [as of 18/03/22] | 1 year | 3 years | 5 years | 10 years |
| VTI | 3.94% | 15.79% | 13.74% | 13.58% |
| CRSP U.S. Total Market | 6.94% | 16.74% | 14.33% | 13.73% |
The fund invests entirely in the United States.
Top 10 Holdings
VTI details
| Brand | Vanguard |
| Expense Ratio | 0.03% |
| YTD Return | -7.81% |
| AUM | $285.63B |
| Number of Holdings | 4033 |
| Avg. Spread ($) | $0.03 |
| Average Daily $ Volume | $1.22B |
3. iShares Core S&P 500 ETF
IVV, one of the numerous ETFs that reflect the S&P 500 Index, provides good exposure to large-cap stocks.
Despite popular belief that the S&P 500 index gives pure market-cap access to the US market, the index’s committee has the authority to omit individual companies.
IVV also has a smaller skew than our benchmark because it trades at a lower market capitalization. Nonetheless, our research shows that these discrepancies are mainly academic, as the fund provides excellent coverage.
IVV is organized as a 1940 Act Fund, which, in comparison to other structures, makes it more appealing to buy-and-hold investors because dividends are investible.
The fund issues daily positions. The MSCI ESG Fund Rating for the iShares Core S&P 500 ETF is AA, with 7.79/10.
Performance
| Performance [as of 18/03/22] | 1 year | 3 years | 5 years | 10 years |
| IVV | 8.98% | 16.70% | 14.35% | 13.97% |
| S&P 500 | 11.53% | 17.54% | 14.91% | 14.25% |
The fund invests entirely in the United States.
Top 10 Holdings
IVV details
| Brand | iShares |
| Expense Ratio | 0.03% |
| YTD Return | -7.13% |
| AUM | $324.85B |
| Number of Holdings | 507 |
| Avg. Spread ($) | $0.03 |
| Average Daily $ Volume | $3.99B |
FAQs
What ETF has the lowest fees?
- JP Morgan Betabuilders US Equity ETF
- Vanguard Total Stock Market ETF
- iShares Core S&P 500 ETF
What is the expense ratio?
These charges are calculated as a portion of an investor’s annual cost. ETF expense rates are often less than 1%. That means you spend less than $1 per year on expenses for every $100 you invest.
The fee that mutual funds or exchange-traded funds charge investors are Expense ratio. This charge covers the costs of management, asset allocation, marketing, and other services.
How much should I invest in my child’s education?
Saving money without a target is challenging. As soon as your child decides what they want to pursue, look out for colleges or universities that offer the course and do your research to find out the tuition fees and accommodation costs to get an idea of the total cost of education and then explore saving plans that can help you accumulate the amount you need for college.
How can I save for my child’s higher education?
It is extremely important for parents to realize that their saving needs to beat inflation for them to afford the future cost of education.
They should choose an asset class that provides them with inflation-beating returns. In most cases, mutual funds offer better returns than other investment vehicles, which can help parents save for their child’s education.
