The 45 Cheapest Index Funds in the ETF Universe
Vanguard. Schwab. iShares. SPDR. All of these exchange-traded fund (ETF) giants undercut each other for years by putting out the cheapest index funds they could. All competed against each other in a so-called "race to zero."
And all lost to the most unlikely of dark horses.
Upstart SoFi recently rattled the low-cost establishment by becoming the first provider to launch ETFs with zero annual expenses - and did so with the launch of its first two ETFs. (For the record, Fidelity introduced the first no-fee index funds in the mutual fund industry back in August 2018.)
The large-cap SoFi Select 500 ETF (SFY) and mid-cap SoFi Next 500 ETF (SFYX) joined the markets on Thursday, April 11. Each fund has a listed expense ratio of 0.19%, but SoFi will waive those fees through at least June 30, 2020. That clearly will make them the cheapest ETFs in their respective categories.
But it doesn't cost much to invest in any corner of the market. A host of other categories feature index funds that, while not totally free, charge microscopic fees that make them extremely cost-efficient.
Here are 45 of the cheapest index funds in the U.S. ETF universe. These ETFs, listed by Morningstar category, cover stocks, bonds and other assets across a wide range of strategies.
U.S. Large Blend
Cheapest fund: JPMorgan BetaBuilders U.S. Equity ETF
Expenses: 0.02%
JPMorgan Chase's (JPM) JPMorgan Asset Management division - a mid-tier player in the ETF space at about $26 billion in assets under management - made a big splash in March when it launched the JPMorgan BetaBuilders U.S. Equity ETF (BBUS, $52.01) - the cheapest U.S. large blend fund at just 2 basis points, undercutting titans such as the Vanguard S&P 500 ETF (VOO), iShares Core S&P 500 ETF (IVV) and SPDR S&P 500 Trust ETF (SPY).
BBUS currently holds a portfolio of 622 stocks that are primarily large-cap in nature (typically more than $10 billion), though it does include about 12% exposure to midsize companies (typically $2 billion to $10 billion) and a handful of small caps ($300 million to $2 billion).
Top holdings are similar to what you'll find in S&P 500 trackers: Microsoft (MSFT), Apple (AAPL) and Amazon (AMZN) combine to represent about 10% of the fund's weight (the percentage of the portfolio they represent).
Note: Morningstar listed the SoFi Next 500 ETF () as a large blend fund at launch but listed no portfolio information. SFYX seems likely to be recategorized as a mid-cap growth fund. The ETF's fund summary says the
