Best Low Expense Ratio ETFs Right Now • Updated Daily • Benzinga

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If you’re new to investing, the stock market can be your financial gateway to getting a better return on your money. More than 8,000 companies are listed on major exchanges, making it difficult to decide which stocks to invest your money in. But ETFs allow you to buy a large chunk of the market in a single transaction at a low cost. That’s why it’s important to learn about ETFs with low expense ratios.

An ETF holds assets such as stocks, commodities, securities, real estate, and bonds while tracking benchmark indices with hundreds of underlying companies. These ETFs charge you a small annual fee, known as expense ratios, to cover the costs of fund management and other operations.

For example, you can buy a single share of JPMorgan US Aggregate Bond ETF (NASDAQ:JAGG) at an expense ratio of 0.07%. This means that you will be charged $7 per year for every $10,000 you invest in the JPMorgan Bond ETF.

A look at the best ETFs with low expense ratios

  • Fidelity MSCI Information Technology Index ETF
  • Vanguard Information Technology ETFs
  • SPDR Fund for the Technology Sector

Low Fee ETFs Biggest Winners and Biggest Losers

Stay on top of the exchange’s best and worst performing low-end ETFs.

Here are the positions of these ETFs before the market opened to help you make better predictions about price movements.

Low expense ratio secondary market ETFs

Below are quotes for ETFs with low spending rates after close of trading hours on the exchange.

Why invest in these ETFs?

Here are the top three reasons why you should consider investing in low expense ratio ETFs.

1. ETFs with low expense ratios are cheaper than mutual funds.

ETFs and mutual funds are 2 of the most promising financial products in the stock market. While both investment options charge you an expense ratio, ETFs are generally cheaper than mutual funds.

There are only a handful of mutual funds with an expense ratio of less than 1%, while you can choose to invest in over 100 ETFs that charge you an expense ratio of 0.02% to 0.07%. This is because mutual funds require a team of professionals including equity analysts, fund managers and chartered accountants to operate properly. ETFs can be managed passively with less effort by mirroring a benchmark.

2. Low-fee ETFs can diversify your portfolio.

ETFs give you the opportunity to invest across a wide variety of industries and asset classes at an incredibly low cost. Depending on your financial needs, you can also invest in domestic or global ETFs that can be traded at a low cost. These affordable ETFs can instantly diversify your financial portfolio by allowing you to hold shares in hundreds of penny stocks, small, medium and large companies with a single transaction.

For example, by investing $10,000 in Vanguard S&P 500 ETF (NASDAQ: VOO), you can invest $8,834 in large-cap stocks, $1,049 in mid-cap stocks, $112 in small-cap stocks, and $4 in stocks in micro cap companies. All this at a low expense ratio of 0.03% or $3 per year.

3. ETFs with low expense ratios generate higher long-term returns.

ETFs with low expense ratios favor long-term investors. If you’re an investor who likes to buy and hold investments for several years to grow them, high expense ratios can slowly erode your returns.

The compounding effect of high expense ratios on ETFs can detract a large chunk from your returns. Let’s say you made a $10,000 investment in an ETF with an expense ratio of 2%. At a constant rate of return of 10% per year, you would lose $200 of your net profit of $1,000 in year 1. In 5 years, you would lose $1,363 on your profit of $6,105. In 10 years, you would lose $4,043 of your $15,937 profit.

On the other hand, imagine you made a $10,000 investment in an ETF with a low expense ratio of 0.5%. At a constant rate of return of 10% per year, you would only lose $50 of your net profit of $1,000 in Year 1. In 5 years you would lose $366 on your $6,105 profit. In 10 years, you would lose $1,179 of your $15,937 profit. For comparison, between these 2 ETFs, your earnings would increase 28.64% with the lower expense ratio ETF.

Top 3 Low Expense Ratio ETFs by AUM

Low expense ratio ETFs are profitable trades for both short and long term investment strategies. But this is not the only factor that can affect the performance of your investments.

Before investing in ETFs, you should also consider benchmark index performance, performance history, trading volumes, and total assets under management (AUM). Check out these low expense ratio ETFs to get you started.

1. Fidelity MSCI Information Technology Index ETF (NASDAQ: FTEC)

The Fidelity MSCI Information Technology Index ETF has a low expense ratio of 0.08%. It tracks the MSCI USA IMI Information Technology Index and holds assets from more than 300 technology companies.

Launched in 2013, the Fidelity MSCI Information Technology Index ETF has total assets under management of $3 billion. It has an annual dividend rate of $0.85. This ETF is highly liquid with an average daily trading volume of 447,900 shares. The Fidelity MSCI Information Technology Index ETF has a 1-year return of 11.13% and a 5-year return of 122.97%.

2. Vanguard Information Technology ETF (NASDAQ: VGT)

Vanguard Information Technology ETF has been in the market since 2004. It corresponds to the MSCI US Investable Market Information Technology 25/50 Index and provides exposure to companies in the information technology sector.

Vanguard Information Technology ETF has total assets under management of $24 billion. It has a low expense ratio of 0.10% and trades over a million shares daily. You can earn $2.96 per share in annual dividends on this investment. Vanguard Information Technology ETF has a 1-year return of 11.14% and a 5-year return of 129.22%.

3. SPDR Technology Sector Fund (NASDAQ: XLK)

Technology Select Sector SPDR Fund reflects the Technology Select Sector Index with underlying companies trading wireless telecommunications services and semiconductors. It has a low spending rate of 0.13%.

Technology Select Sector SPDR Fund trades over 11 million shares daily. It has total assets under management of $25 billion with an annual dividend rate of $1.20. Technology Select Sector SPDR Fund has a 1 year return of 14.49% and a 5 year return of 125.44%.

Best Online Brokers for Low Fee ETFs

An online broker will help you compare the best ETFs and invest in major exchanges. Discover some of the best online brokers on the market.

securely through the Self Direct Investment by JP Morgan website

1. You invest through JP Morgan

Chase You Invest is an online broker that helps you invest with the expertise of JP Morgan. You can open a You Invest Trade account with a minimum deposit of $0 or a You Invest Portfolio account with a minimum deposit of $500.

You can research, trade and manage your investments online with Chase You Invest. It is regulated by the Financial Industry Regulatory Authority (FINRA).

2. First class

You can invest on Firstrade in the full range of financial products, such as stocks, ETFs, options, fixed income and mutual funds. There is no minimum deposit required to open an account.

Firstrade allows you to trade wherever you are thanks to its mobile application for Android and iPhone. Through this platform you can access extensive reports from Morningstar, Briefing.com, Zacks and Benzinga. Firstrade is regulated by FINRA.

3. TD Ameritrade

TD Ameritrade is an intuitive online broker that allows you to trade commission-free on the platform. You can open a new account on the platform with no minimum deposit.

TD Ameritrade’s powerful trading tools help you make smarter investments. You can browse 400,000 data points from around the world to discover key indicators of successful trades. TD Ameritrade is regulated by FINRA.

Spend less, earn more

Low expense ratios can give you affordable access to ETFs. If you are a long-term investor, you can reap significant benefits from returns and dividends on your investment. These ETFs also trade in high volumes throughout the year, making it easier for you to find buyers as an exit strategy.

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ETFs are a collection of stocks, bonds, real estate and other asset classes.

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Why low expense ratio ETFs?

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ETFs with low expense ratios are a great way to diversify your portfolio and invest at a lower cost.

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What are the best low expense ratio ETFs?

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Benzinga lists the best low expense ratio ETFs above.

Not all news on the site reflects the site’s point of view, but we automatically transmit and translate this news through programmatic technology on the site and not from a human editor.

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