What is the lowest fee ETF for the S&P 500?
VOO and IVV boast the lowest management fee at 0.03%, about one-third of the SPY ETF. While the difference between a 0.03%, and 0.0945% expense ratio may seem trivial, such fees can really add up. For every $10,000 invested, these respective fees equal $3 and $9.45 annually.
If you want an inexpensive way to invest in S&P 500 ETFs, you can gain exposure through discount brokers. These financial professionals offer commission-free trading on all passive ETF products. But keep in mind that some brokers may impose minimum investment requirements.
| Fund (ticker) | Strategy | Net Assets |
|---|---|---|
| SPDR S&P 500 ETF Trust (SPY) | Core | $382.2 billion |
| iShares Core S&P 500 ETF (IVV) | Core | $336.1 billion |
| Vanguard 500 Index Fund (VOO) | Core | $314.0 billion |
| SPDR Portfolio S&P 500 ETF (SPLG) | Core | $19.3 billion |
Buying individual S&P 500 stocks
Online trading platforms like Ally Invest and E*TRADE® offer commission-free trading.
Low expenses: The SPY ETF has a low expense ratio of 0.09%, which is much lower than average mutual fund expenses, which are often 0.50% or more.
Our recommendation for the best overall S&P 500 index fund is the Fidelity 500 Index Fund (FXAIX). With a 0.015% expense ratio, this fund is the cheapest one on our list.
Here's a summary of which one to choose:
If you want to own only the biggest and safest stocks, choose VOO. If you want more diversification and exposure to mid-caps and small-caps, choose VTI. If you can't decide, consider simply buying both of them (assuming that commissions are low or free).
If you don't want to put a lot of effort into managing your investments, then S&P 500 ETFs are a good solution. But if you're willing to do the work, then you might do even better in the long run with a portfolio of hand-picked stocks (although, the odds are against you).
It's almost guaranteed to see positive long-term returns. There are never any guarantees when investing. However, investing in an S&P 500 ETF is about as close to guaranteed long-term returns as you can get in the stock market. The S&P 500 itself has a decades-long history of recovering from even the worst downturns.
- Find your S&P 500 index fund. It's actually easy to find an S&P 500 index fund, even if you're just starting to invest. ...
- Go to your investing account or open a new one. ...
- Determine how much you can afford to invest. ...
- Buy the index fund.
Why not to invest all in S&P 500?
Perhaps the biggest downside of an S&P 500 index fund is that it can only earn average returns. This type of investment is designed to follow the market, so it's simply not possible for it to beat the market. For many people, lower returns are a worthwhile trade-off for the ease and simplicity of an S&P 500 index fund.
It might actually lead to unwanted losses. Investors that only invest in the S&P 500 leave themselves exposed to numerous pitfalls: Investing only in the S&P 500 does not provide the broad diversification that minimizes risk. Economic downturns and bear markets can still deliver large losses.
SPLG has a lower expense ratio than SPY by 0.06%. This can indicate that it's cheaper to invest in SPLG than SPY. SPLG targets investing in US Equities, while SPY targets investing in US Equities.
The SPY comes with an 0.09% expense ratio, which is the ETF equivalent of fund management fees. An investor who invests $100,000 into the SPY ETF must pay $90 as management fees.
The VOO ETF holds buy signals from both short and long-term Moving Averages giving a positive forecast for the stock. Also, there is a general buy signal from the relation between the two signals where the short-term average is above the long-term average.
How Does an S&P 500 ETF Differ from an S&P 500 Index Fund? Both an index ETF and an index mutual fund passively track the S&P 500 index in order to duplicate its return. ETFs trade like stocks on exchanges, while mutual funds can only be traded at the end of each trading day.
The 90/10 strategy calls for allocating 90% of your investment capital to low-cost S&P 500 index funds and the remaining 10% to short-term government bonds. Warren Buffett described the strategy in a 2013 letter to his company's shareholders.
Fidelity® 500 Index Fund is a diversified domestic large-cap equity strategy that seeks to closely track the returns and characteristics of the S&P 500® index. The S&P 500® is a market-capitalization-weighted index designed to measure the performance of 500 large-cap U.S. companies.
Consider looking for S&P 500 index funds with low expense ratios, several years of operation and a healthy amount of assets under management (AUM). The longer a fund has existed, the more information you have about its performance history.
VOO - Performance Comparison. In the year-to-date period, SCHD achieves a 2.65% return, which is significantly lower than VOO's 7.93% return. Over the past 10 years, SCHD has underperformed VOO with an annualized return of 11.35%, while VOO has yielded a comparatively higher 12.70% annualized return.
Why is VTI so popular?
The Vanguard Total Stock Market ETF is a popular way to save for retirement or long-term growth. The fund represents a snapshot of the stock market, allowing investors to track the gains of the market as a whole rather than invest in individual shares.
- Vanguard S&P 500 ETF (VOO).
- Vanguard Total Stock Market ETF (VTI).
- Vanguard Total Bond Market ETF (BND).
- Vanguard Total International Stock ETF (VXUS).
- Vanguard FTSE All-World Ex-U.S. ETF (VEU).
- Vanguard Total World Stock ETF (VT).
In 1980, had you invested a mere $1,000 in what went on to become the top-performing stock of S&P 500 (^GSPC -0.12%), then you would be sitting on a cool $1.2 million today. That equates to a total return of 120,936%. The stock? None other than Gap (GPS 0.84%).
At any given time, the spread on an ETF may be high, and the market price of shares may not correspond to the intraday value of the underlying securities. Those are not good times to transact business. Make sure you know what an ETF's current intraday value is as well as the market price of the shares before you buy.
Assuming an average annual return rate of about 10% (a typical historical average), a $10,000 investment in the S&P 500 could potentially grow to approximately $25,937 over 10 years.
