7 Low-Cost ETFs: Should You Invest?

Exchange-traded funds (ETFs) are amazing investment tools, allowing long-term investors to pay low management fees while giving traders opportunities to make massive amounts of money in short periods of time — if they know what they’re doing.

If you’re not 100% confident in your stock trading abilities and lack full conviction in your positions, then emotion will likely get in the way and you will probably fail. If this describes you, then you’re much better off taking a passive approach to investing, which can be done through low-cost ETFs.

The seven ETFs covered below have some of the lowest expense ratios you will find throughout the entire ETF universe. However, that doesn’t necessarily mean they’re the best investment options at this point in time.

All numbers below are as of Oct. 26, 2018.

Purpose: Tracks the performance of the U.S. Treasury Floating Rate Index, which is composed of U.S. Treasury floating rate bonds.

Net Assets: $301.7 million

Average 3-Month Volume: 82,256

Dividend Yield: 1.55%

Expense Ratio: 0.15%

1-Year Performance: 1.80%

Analysis: Unless you’re interested in waiting very patiently to take advantage of mispricings or you have a substantial amount of capital and want to implement a professional trading strategy to pick up miniscule returns, there are better ways to invest your time and capital than this ETF.

Purpose: Tracks the performance of the CEA Cybersecurity Index.

Net Assets: $766.80 million

Average 3-Month Volume: 196,183

Dividend Yield: 0.07%

Expense Ratio: 0.60%

1-Year Performance: 9.81%

Analysis: This is a high-quality ETF that launched in mid-summer 2015. Cybersecurity is going to continue to be important in the digital world. 

Purpose: Tracks the Dow Jones Broad Stock Market Index – the largest 2,500 publicly traded companies in the U.S.

Net Assets: $12.83 billion

Average 3-Month Volume: 798,432

Dividend Yield: 1.78%

Expense Ratio: 0.03%

1-Year Performance: 4.52%

Analysis: This ETF launched back in 2009. If you’re bullish, then it’s an option to consider, but the volume is on the low side when compared with its peers.

Purpose: Tracks the performance of the CRSP U.S. Total Market Index, which is all stocks on the NYSE and NASDAQ.

Net Assets: $100.11 billion

Average 3-Month Volume: 2,794,054

Dividend Yield: 1.83%

Expense Ratio: 0.04%

1-Year Performance: 4.52%

Analysis: VTI has many of the same top holdings as SCHB and these two ETFs trade in tandem most of the time. But VTI offers a lot more liquidity and a slightly higher yield.

Purpose: Tracks the performance of the S&P 500.

Net Assets: $99.97 billion

Average 3-Month Volume: 2,744,749

Dividend Yield: 1.84%

Expense Ratio: 0.04%

1-Year Performance: 5.39%

Analysis: Trades along with SCHB and VTI despite a different design. It has many of the same top 10 holdings but VOO offers a high yield as well as plenty of liquidity.

Purpose: Tracks the total return of the FTSE Developed ex-U.S. Index. In simpler terms, it tracks the performance of large-cap and mid-cap stocks in developed countries excluding the U.S.

Net Assets: $15.42 billion

Average 3-Month Volume: 3,187,138

Dividend Yield: 2.61%

Expense Ratio: 0.06%

1-Year Performance: -8.98%

Analysis: If you’re going to invest in a developed market, it might as well be the U.S.

Purpose: Tracks the performance of the S&P 500.

Net Assets: $157.33 billion

Average 3-Month Volume: 3,840,854

Dividend Yield: 1.84%

Expense Ratio: 0.04%

1-Year Performance: 5.35%

Analysis: Many of IVV’s top holdings are the same as SCHB, VTI, and VOO. So, while IVV trades the same as those ETFs, you should look at other factors as well. The yield for IVV and the expense ratio are very comparable to the other ETFs. I'd call it a wash.

These are several high-quality ETFs that would be good options in a bull market. Whether you’re a bull or a bear, you should strongly consider putting some of these ETFs on your watch list for future consideration.

(For more, see: The 8 Best ETFs for Rising Rates, Flagging Stocks.)

At the time this article was written, Dan Moskowitz did not have any positions in TFLO, CIBR, SCHB, VTI, VOO, SCHF or IVV. He was long LABD.