There are no guarantees on Wall Street, of course, and the best ETFs aren’t always going to fall into a simple screen for the biggest ETFs or the cheapest ETFs. I mean, if it was that easy, every ETF investor would be a millionaire in short order!
However, the important thing for small-time traders to remember is that sometimes the safest investment strategy is to rely on diversification and scale to extend your reach, and to limit your expenses whenever possible. So following those two rules, the biggest ETFs and the cheapest ETFs are natural places to start.
Keep in mind that assets under management and volume — my metrics for the biggest ETFs — cover the amount of money currently invested in the fund and the number of shares trading hands each day during a given trading session.
Also keep in mind that expenses are a percentage you get charged each year on the assets you have invested in a fund. So 0.1% in expenses would cost you $10 annually on $10,000 invested. To me, the best ETFs are always the cheapest ones because you get to keep more of your own money instead of enriching the manager.
Here’s a quick rundown of what could be the best ETFs for you if you’re simply looking for a large fund that won’t cost you a fortune to invest in:
Biggest and Best ETFs #1 — SPDR S&P 500 ETF (SPY): This fund is benchmarked to the S&P 500, and is the best ETF if you simply want to play domestic stocks. It is the largest of all exchange-traded funds at $143.3 billion in assets, and has average volume of 117.6 million shares traded daily. Expenses are 0.09% annually.
Biggest and Best ETFs #2 — Vanguard FTSE Emerging Markets ETF (VWO): This exchange-traded fund is the best ETF to play emerging markets cheaply and in a diversified way. The VWO fund is benchmarked to an FTSE index of emerging-market investments across Asia, South America and elsewhere. It has $50.4 billion in assets and average volume of 23.1 million shares daily. Expenses are 0.18% annually.
Biggest and Best ETFs #3 — iShares Core S&P 500 ETF (IVV): This ETF is similar to the SPY, benchmarked to the S&P 500. It has $45.3 billion in assets and average volume of 4.6 million shares. Expenses are just 0.07% annually, so while it isn’t the biggest domestic equity fund, it could be the best ETF if you’re judging on fees alone.
Biggest and Best ETFs #4 — iShares MSCI EAFE ETF (EFA): This alphabet soup investment is the best ETF for diversified international investing, playing mature companies in Europe as well as emerging markets with more aggressive companies. The EFA fund has $44.8 billion in assets and trades 16.3 million shares daily. Expenses are a bit higher than the previous group at 0.34% annually, but this could be the best ETF when you compare it with other international funds that are considerably more expensive.
Biggest and Best ETFs #5 — iShares MSCI Emerging Markets ETF (EEM): Similar to the VWO, this fund is one of the best ETFs for emerging-market investors. It has $39.3 billion in assets and trades 70.8 million shares daily. Expenses are 0.69%.
More on the Best ETFs
- Visit the official SPY website here for details. (State Street Global Advisors SPDRs)
- Visit the official VWO website here for details. (Vanguard)
- Visit the official IVV website for more details. (iShares)
- Visit the official EFA website here for more details. (iShares)
- Visit the official EEM website here for more details. (iShares)
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.