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%.
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 |
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