ETFs, like index mutual funds, monitor a benchmark index passively. As a result, the top ETFs have the lowest expense ratios. If you’re looking for an ETF that mirrors the S&P 500 Index, the one with the minor expense ratio is likely to be the best option.
If the expense ratios are close, you should choose the one with the most assets under management. If you’re searching for the best ETFs to invest in, the largest ETFs by assets under management are a great place to start.
Unlike their mutual fund siblings, exchange-traded funds (ETFs) with the most money invested in them can have benefits over ETFs with fewer assets under management.
The total market value of the securities that a person or corporation manages on behalf of clients is known as assets under management (AUM).
The standards and methods for assets under management differ from firm to firm. Some financial firms calculate AUM by including cash deposits, unit trusts, and money.
Others limit it to funds under permissive management, in which the investors deputized trading rights to the corporation.
One of the most important characteristics when purchasing exchange-traded funds (ETFs) is assets under management. Trading volume, costs, and monitoring records are valuable data points to investigate. Investors avoid buying sparsely traded ETFs, which explains the high holdings and trading volume.
There is the possibility for more severe price movements when there are fewer investors (implying lower volume) (or what is called the “spread”). ETFs can trade at a markup or a discount, just like closed-end mutual funds. The greater the assets and trading volume, the narrower the spread.
Finally, ETFs with a solid track record are usually preferable to those with a poor track record. The ETF’s tracking record indicates how closely it has followed the benchmark. The better the fund performs, the closer it gets to the bar.
Returning to the initial premise, ETFs with the most assets under management have more trading volume, lower expenses, and better monitoring. As a result, the most significant feature of the best ETFs to look for is assets under management.
An ETF’s AUM is calculated by multiplying the shares outstanding by the current market price per share. The value of an ETF’s assets will fluctuate due to changes in the underlying securities’ weight and the formation of new shares or redemption of current shares.
It’s worth mentioning that the market capitalization of an ETF and the net asset value (NAV) of its underlying securities may differ. The discrepancy results in a discount or a premium in the ETF’s trading price.
Top 3 ETFs with the highest AUM
| Sr No | Symbol | Name | AUM | Average Daily Share Volume (3 Months) |
| 1 | SPY | SPDR S&P 500 ETF Trust | $386,633,000.00 | 112,509,680 |
| 2 | IVV | iShares Core S&P 500 ETF | $310,256,000.00 | 8,616,186 |
| 3 | VTI | Vanguard Total Stock Market ETF | $273,050,000.00 | 5,093,524 |
1. SPDR S&P 500 ETF Trust
Essentials
| Issuer | State Street |
| Brand | SPDR |
| Structure | UIT |
| Expense ratio | 0.09% |
| Inception | Jan 22, 1993 |
| Index Tracked | S&P 500 Index |
| Segment | Equity US Large Cap |
| Weighting Scheme | Market Cap |
2. iShares Core S&P 500 ETF
Essentials
| Issuer | Blackrock Financial Management |
| Brand | iShares |
| Structure | ETF |
| Expense ratio | 0.03% |
| Inception | May 15, 2000 |
| Index Tracked | S&P 500 Index |
| Segment | Equity US Large Cap |
| Weighting Scheme | Market Cap |
3. Vanguard Total Stock Market ETF
Essentials
| Issuer | Vanguard |
| Brand | Vanguard |
| Structure | ETF |
| Expense ratio | 0.03% |
| Inception | May 24, 2001 |
| Segment | Equity US Total Market |
| Weighting Scheme | Market Cap |
FAQs
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.
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 an expense ratio?
The fee that mutual-fund or exchange-traded fund charge investors are 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.
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.
What were the top 3 ETFs in 2022?
- SPDR S&P 500 ETF Trust
- iShares Core S&P 500 ETF
- Vanguard Total Stock Market ETF
What is an ETF?
An exchange-traded fund is an investment vehicle similar to a mutual fund. ETFs are traded on stock exchanges. ETF tracks a commodity, index, bond, or basket of assets like an index fund.
Should I put all my savings into an ETF?
It is extremely dangerous to put all your savings into one asset class. As the popular saying goes, ‘Don’t put all your eggs in one basket,’ investors should look to diversify their portfolios.
Is ETF better than a mutual fund?
ETFs and mutual funds are two different investment vehicles for investors. ETFs are both actively and passively managed, but most are passively managed. Most mutual funds are actively managed by fund managers. An investor needs to understand what an investment vehicle offers and how it can help them reach their goal. There’s no right answer to this question, as it differs based on an individual’s financial goals.
