There is a cost for an investment company to operate a mutual funds and ETFs. It includes the manager’s fees, administrative costs, compliance, trading costs, 12b-1 fees (sales fee for the company who sold you the fund) and advertising. The expense ratio is a percentage that directly lowers the return to a fund’s investors. If a fund’s assets grew 10% during a particular year and the expense ratio is 1%, the investor would receive a 9% return on their investment. If the fund lost 5% during a year and had a 1% expense, the investor would lose 6%.

lowest expense ratio mutual funds ETF

The expense ratio is a very critical number when comparing investments.  Some investments types will have a higher expense ratio others are just too expensive.  Here are the ETFs and Mutual Funds with the lowest expense ratios.

ETFs (Exchange Traded Funds)

Name Ticker Annual Report Gross Expense Ratio
Schwab US TIPS ETF™ SCHP 0.07
Schwab US Mid-Cap ETF™ SCHM 0.07
Schwab US Large-Cap Value ETF™ SCHV 0.07
Schwab US Large-Cap Growth ETF™ SCHG 0.07
Schwab US REIT ETF™ SCHH 0.07
Schwab US Dividend Equity ETF™ SCHD 0.07
iShares Core S&P Total US Stock Mkt ITOT 0.07
iShares Core S&P 500 IVV 0.07
Vanguard Total Bond Market ETF BND 0.07
Vanguard Total Stock Market ETF VTI 0.05
Schwab US Aggregate Bond ETF™ SCHZ 0.05
Vanguard S&P 500 ETF VOO 0.05
Schwab US Large-Cap ETF™ SCHX 0.04
Schwab US Broad Market ETF™ SCHB 0.04

Mutual Funds

Our search for mutual funds only included A shares.  There are different share classes, some depend on the type of compensation the person who sold you the fund is getting (this may not affect you if you use no load funds or have a fee only financial planner) and the amount you invest.  Some companies, like Vanguard, offer a lower expense if you invest a certain amount (for example $10,000).  We are just looking at A shares.

Name Ticker Annual Report Gross Expense Ratio
Vanguard Short-Term Investment-Grade Inv VFSTX 0.2
Vanguard High Dividend Yield Index Inv VHDYX 0.18
Vanguard Total Stock Mkt Idx Inv VTSMX 0.17
Vanguard 500 Index Inv VFINX 0.17
Vanguard MA Tax-Exempt Inv VMATX 0.16
Vanguard OH Long-Term Tax-Exempt VOHIX 0.16
SEI S&P 500 Index A (SIIT) SPINX 0.11
Fidelity Spartan® Total Market Idx Inv FSTMX 0.1
Vanguard Total Bond Market II Idx Inv VTBIX 0.1
Fidelity Spartan® Extended Mkt Index Inv FSEMX 0.1
Fidelity Spartan® 500 Index Inv FUSEX 0.1

I appreciate any feedback for our AIO Financial blog. Please contact me if you have any comments, questions, and suggestions. You can comment here or contact me through Facebook, Twitter, email (bill@aiofinancial.com), or call 520-325-0769.

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