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ETF List: The Best (Low-Cost) ETFs

Quick note: This article focuses on ETFs from the perspective of a buy & hold investor. If you’re looking for information for more active investors, I’d suggest signing up for a Morningstar account. (It’s free.)

Last week’s post on the best/lowest-cost index funds went company-by-company. One of the nice things about ETFs is that all you need is a discount brokerage account somewhere, and you can pick and choose between ETF providers–no need to stick with just one company.

In that vein, this week’s comparison of ETFs  is sorted by asset class rather than by company. Really, it’s just a shopping list of sorts: The lowest-cost ETFs that I’ve found for each asset class. If you know of others that should be added (or any that should be replaced with something else), please feel free to share. :)

Update: Because of the fact that Vanguard now allows investors to trade Vanguard ETFs with no commissions in a Vanguard brokerage account, I’ve used Vanguard  ETFs wherever possible. (In most cases, they have the lowest expense ratios as well.)

Domestic Stock ETFs

Asset Class Name Ticker ER
Total Stock Market Vanguard Total Stock Market ETF VTI 0.07%
Large-Cap Blend Vanguard S&P 500 Index ETF VOO 0.06%
Large-Cap Value Vanguard Value ETF VTV 0.14%
Large-Cap Growth Vanguard Growth ETF VUG 0.14%
Small-Cap Blend Vanguard Small-Cap ETF VB 0.14%
Small-Cap Value Vanguard Small-Cap Value ETF VBR 0.14%
Small-Cap Growth Vanguard Small-Cap Growth ETF VBK 0.14%

International Stock ETFs

Asset Class Name Ticker ER
Developed Markets:
Large-Cap Blend Vanguard Europe Pacific ETF VEA 0.15%
Large-Cap Value iShares MSCI EAFE Value Index EFV 0.40%
Mid-Cap Value WisdomTree Interntnl SmallCap Div DLS 0.58%
Emerging Markets:
Large-Cap Blend Vanguard Emrg Mkts ETF VWO 0.27%
Emrg & Devlpd Markets:
Large-Cap Blend Vngrd FTSE All-World Ex-U.S. ETF VEU 0.25%
Mid-Cap Blend Vngrd FTSE AW ex-US Sm-Cap ETF VSS 0.40%

Bond ETFs

Asset Class Name Ticker ER
Short-Term Bond Vanguard Short-Term Bond ETF BSV 0.12%
Interm-Term Bond Vanguard Total Bond Market ETF BND 0.12%
Interm-Term Gov’t Vanguard Inter-Term Gov’t Bond ETF VGIT 0.15%
Long-Term Gov’t Vanguard Long-Term Gov’t Bond ETF VGLT 0.15%
Long-Term Bond Vanguard Long-Term Bond ETF BLV 0.12%
TIPS iShares Barclays TIPS Bond TIP 0.20%

Alternative Asset Class ETFs

Asset Class Name Ticker ER
REITs Vanguard REIT ETF VNQ 0.13%
Precious Metals (Gold) SPDR Gold Trust ETF GLD 0.40%

Too Much of a Good Thing

In my opinion, that very same flexibility–the ability to buy 800 different ETFs from one discount brokerage account–is also the danger of ETF investing. It’s easy to get carried away tinkering with your portfolio, when the reality is that most of us would be better served by simply buying a handful of ETFs and holding them as long as we can.

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Comments

  1. Thanks for posting this, great list. While I might add a few others you’ve provided a list for most investors to start with. Like mutual funds, the ETF space is getting more and more crowded as the financial services companies jump on the band wagon. For the most part, there are at best 50 or so that really make sense. Low expenses, the use of a logical index, and sufficent daily trading volume are three key factors. In a few cases the premuim/discount can be a factor as well. Great info as usual both here and on Twitter.

  2. Thanks, Roger.

    By the way, if you (or any other readers) want to mention any other ETFs that you think should be added to the list (because, for example, they cover asset classes not covered above), please do! :)

  3. Nice to know my entire ETF portfolio can be found on this list! woohoo!

  4. Great list, Mike! Vanguard definitely has the low cost provider status.

    The only one I can think of to suggest is MBB, with government backed mortgages at 25bps.

  5. Nice post, Mike.

    Regarding ETFs, I use the following for myself and my clients:

    VTI – Domestic Total Market (in your list above)
    EFA – International Developed Markets
    IEF – Intermediate Term Treasuries

    Also, Morningstar recently updated their list of median mutual fund expenses. I thought perhaps you and your readers might want to check it out:

    http://news.morningstar.com/articlenet/article.aspx?id=311379

  6. Retirement Savior and Russ: Thanks for adding your ETF suggestions.

    Also, that’s great info from Morningstar. Thanks for sharing it. I find it interesting how the median cost data compares to dollar-weighted average cost data.

  7. I guess you consider VSS to be mid-cap despite Vanguard calling it small cap.

    My portfolio also includes the following asset classes:
    International value: EFV
    International small cap value: DLS
    International real estate: WPS

    Why you didn’t include these asset classes? Did you not find funds, or did you not feel they were important? My feeling is that US people have country bias, and if you include small cap, value, and real estate for domestic markets, then you should also do for foreign markets.

    At 11 asset classes, I am probably on the high end of what most people are willing to manage, but with my monthly (free) ETF purchases I am rebalancing regularly and always buying the cheapest asset class at any given time.

  8. Steve: My reason for classifying VSS as mid-cap is simply that Morningstar classifies it that way.

    My reason for not including international value and international small-cap value was simply that I hadn’t found any with ERs that were particularly low. Thank you for providing your suggestions.

  9. Mike,

    It’s a great shopping list!

    I had an interesting thought for follow up: It should be possible to figure out which ETFs are different enough to be worth holding. Calculate their correlations coefficient – if the correlation coefficient is close to 1 then there isn’t a lot of point in holding both!

    -Rick Francis

  10. International bonds – BWX
    Int’l inflation-protected bonds – WIP

  11. For those who can’t afford the brokerage fees for ETFs, Schwab provides index funds with costs that come close to matching these ETFs.

  12. Nice lits of ETFs, Mike.

    Which ones do you recommend in tax-deferred and taxable account for each of the asset classes?

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