These funds are both cheap and easily traded.
Eight hundred and twenty-five cheap funds are on our Best ETFs list. Below are displayed the best of the best: an Honor Roll of 63 that are both very high in cost efficiency and very liquid.
BlackRock, the giant of the ETF industry, has 19 winners on the Honor Roll list. Among them: iShares Core S&P Total US Stock Market (ITOT), which gets an A for liquidity and has a zero-dollar cost of ownership because the money it hauls in from stock-lending fees entirely offsets its overhead expenses. Another of its great funds is the iShares Core US Aggregate Bond (AGG).
To land on the Honor Roll an exchange-traded fund has to be at or near the top of its category in cost efficiency. It also has to get a B or better grade on our scorecard for liquidity—a combination of high trading volume and a narrow bid/ask spread.
The Forbes cost formula incorporates expenses, expense offsets from securities lending and the bid/ask spread. All of the Honor Roll funds come in at $250 or less for the cost of investing $10,000 for a decade, some of them a lot less. Eleven of them have negative costs: Their securities lending income more than covers their expenses.
Vanguard is a close runner-up to BlackRock in delivering value to ETF investors, with 17 Honor Roll members. It has close competitors to iShares offerings in Vanguard Total Stock Market (VTI), with a $23 cost of ownership on a $10,000 stake held a decade, and Vanguard Total Bond Market (BND), with a $59 cost. Both of these Vanguard funds get an A+ for liquidity.
State Street’s SPDR family boasts 11 Honor Roll funds. Noteworthy: SPDR S&P Semiconductor (XSD), with a -$200 holding cost for a decade. It’s cheaper to own this fund than to own the stocks in the portfolio.
Fidelity and Schwab are on the Honor Roll with seven and five winners, an excellent showing given that neither is much more than a tenth the size of BlackRock in total Best ETF assets. Fidelity has cheap sector funds (expense ratio, 0.08%). Schwab’s strength is bond funds; Schwab US TIPS (SCHP) is the cost-effective way to get your inflation protection.
A few categories have more than one Honor Roll member: The category is big, has multiple negative-cost funds or has funds in a near tie for cheapest.
Some of the 55 categories of ETFs offer no choices of Honor Roll funds. That happens if the cheapest funds in the category either aren’t particularly cheap or aren’t very liquid.
For an explanation of our rankings and a directory of fund categories, turn to Forbes Best ETFs.
For a searchable directory of fund names and tickers, use the ETF Directory.