10 Low-Cost ETFs to Invest in Right Now

Source: Thinkstock

Exchange-traded funds (ETFs) are attractive investments due to their low costs, tax-efficiency, and low risk, in comparison to stocks and other types of investments. But they’re also great because they are constantly assessed by a fund manager who tracks and monitors the fund’s performance and rebalances its positions by trading its assets to meet the investment objective, typically following a stock or bond index.

Asset classes within the fund can include stocks, bonds, commodities, trusts, or a combination, but most will consist of only one. Some funds experience greater volatility than others depending on its particular assets. The funds you choose, in combination, should be indicative of your risk-tolerance and investment goal. The younger you are, the more aggressive you may want to be, however; certain life events can make us more susceptible to risk. Therefore, a passive investment approach may be more appropriate.

Add these top 10 ETFs to your watch-lists to see how they can help your portfolio.

1. VWO Vanguard FTSE Emerging Markets ETF 

This offers exposure to stocks in emerging markets, such as China, Brazil, and South Africa. This fund has high potential for growth, but is volatile. This fund is only appropriate for long-term goals.

  • Risk: High
  • Goal: track FTSE Emerging Index
  • Expense Ratio: .15%
  • Money Manager:  Vanguard

2. VNQ Vanguard REIT ETF 

VNQ invests in stocks issued by real estate investment trusts (REITs), companies that purchase office buildings, hotels, and other real property. The fund has high potential for investment income and some growth, but is volatile. Use it to diversify the risks of stocks and bonds in a portfolio.

  • Risk: Moderate to High
  • Goal: track the MSCI US REIT Index
  • Expense Ratio: .10%
  • Money Manager:  Vanguard

3. VOO Vanguard S&P 500 

The VOO invests in stocks in the S&P 500 Index, which represent the 500 largest U.S. companies. The fund has high potential for growth and some volatility. Use it for long-term goals where growth is essential.

  • Risk: Moderate to High
  • Goal: track all U.S. stock index
  • Expense Ratio: .05%
  • Money Manager: Vanguard

4. STIP iShares Trust 

STIP iShares offer exposure to short-term U.S. TIPS, which are government bonds whose value typically rises with inflation. The fund has some growth potential and low volatility. Use it as a short-term hedge against inflation.

  • Risk: Low
  • Goal: track index of inflation protected U.S Treasury bonds of less than five years
  • Expense Ratio: .10%
  • Money Manager: BlackRock

5. MUB iShares S&P National AMT

MUB iShares provide exposure to more than 2,000 US municipal bonds with its top holdings in California and New York, representing 42.97% of its assets. The fund offers tax efficiency for investors in higher tax brackets.

  • Risk: Moderate
  • Goal: track index of investment grade US municipal bonds
  • Expense Ratio: .25%
  • Money Manager: BlackRock

[caption id="attachment_629929" align="aligncenter" width="640"]Source: Thinkstock Source: Thinkstock[/caption]

6. BND Vanguard Total Bond Market ETF

The BND invests in more than 3,000 bonds representative of the broad, U.S. investment-grade market. The fund has relatively high potential for investment income with some volatility. The fund is appropriate for mid to long-term goals where the investor is looking for a reliable income stream. Use it as a way to diversify the risks of stocks in a portfolio.

  • Risk: Low to Moderate
  • Goal: track U.S. bond market returns
  • Expense Ratio: .09%
  • Money Manager:  Vanguard

7. BNDX Vanguard Total International Bond ETF 

The BNDX fund employs hedging strategies to protect against uncertainty in exchange rates. The fund offers broad exposure to non-U.S. dollar denominated investment grade bonds. Use it as a hedge against inflation.

  • Risk: Low to Moderate
  • Goal: track Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index
  • Expense Ratio: .20%
  • Money Manager:  Vanguard

8. VEA Vanguard MSCI EAFE ETF 

The VEA invests in a diversified group of stocks of large- and mid-cap companies in developed equity markets (excluding the U.S. and Canada) such as Japan, UK and France. This fund offers exposure to more than 1,300 securities in 24 countries. It is designed for long-term growth.

  • Risk: High
  • Goal: track FTSE Developed ex-North America Index
  • Expense Ratio: .09%
  • Money Manager: Vanguard

9. VT Vanguard Total World Stock Index ETF

The VT invests in both foreign and US stocks, which represent companies in developed and emerging markets. This fund has high potential for growth, but is more volatile. It is designed for long-term growth goals.

  • Risk: Moderate To High
  • Goal: track FTSE Global All Cap Index
  • Expense Ratio: .19%
  • Money Manager: Vanguard

10. VNQI Vanguard ex-US Global Real Estate ETF

The VNQI invests in the S&P Global Exchange U.S. Property Index, which represents international real estate stocks in more than 30 countries. This fund provides broad exposure to international REIT equity markets and has high potential for growth, but is more volatile. It is designed for long-term growth goals.

  • Risk: High
  • Goal: track index of non-U.S. REITs and operating companies
  • Expense Ratio: .27%
  • Money Manager:  Vanguard


Written by Qiana Chavaia. The views expressed herein are not intended to serve as a forecast, a guarantee of future results, investment recommendations or an offer to buy or sell securities by FutureAdvisor. Differences in account size, timing of transactions and market conditions prevailing at the time of investment may lead to different results, and clients may lose money. Past performance is not indicative of future results.

More From Personal Finance Cheat Sheet: