Don’t pay more than you have to for your investments.
Investment fees are kryptonite to your investment returns. The higher the fee, the more it will drain those long-term results. The Securities and Exchange Commission compared the value of a $100,000 portfolio over 20 years when that portfolio is invested with a fee of 0.25%, 0.5% or 1%. After 20 years, the 0.5% fee reduced the portfolio’s value by $10,000 compared to the 0.25% fee portfolio, and the 1% portfolio was worth nearly $30,000 less than the 0.25% portfolio. Luckily, exchange-traded-fund, or ETF, investors don’t need to pay 1% or even 0.25% to find a good investment. ETF providers are increasingly dropping their fees — some going so low as to offer ETFs with no fees at all. Here are seven no-fee ETFs to help you keep your investing costs down.
BNY Mellon US Large Cap Core Equity ETF (ticker: BKLC)
The BNY Mellon US Large Cap Core Equity ETF is a passively managed ETF that tracks the Morningstar U.S. Large Cap Index, which in turn tracks the performance of the largest 70% of companies in the U.S. market. This amounts to 231 holdings as of publication. It does not incorporate environmental, social and governance, or ESG, criteria into its selection process, so this is purely a size play. But if you want low-cost exposure to names like Apple Inc. (AAPL), Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN), it’s a good way to go. Just launched in April 2020, BKLC does a fairly good job of tracking the index, although the exact weights of each holding may vary slightly from the index.
SoFi Select 500 ETF (SFY)
SoFi Invest also offers a fee-free large-cap ETF — at least for the first year — but this one tracks the 500 largest publicly traded companies in the U.S. It weights each company according to three growth signals — sales growth, revenue growth and forward-looking estimates — rather than the traditional market capitalization weighting used by many index ETFs. Companies with stronger scores on these measures get higher weights in the ETF. The managers waive the 0.19% expense ratio on the fund, but keep an eye on it because they promised to do so only through June 30, 2021. As of early November 2021, the fee is still waived, but this could change anytime.
SoFi Next 500 ETF (SFYX)
SoFi is also waiving the 0.19% expense ratio on its SoFI Next 500 ETF. SFYX is the mid-cap version of the SoFi Select 500. SFYX holds 500 mid-cap U.S. stocks that are also weighted by those three growth measures: sales growth, revenue growth and forward-looking estimates. It’s well diversified across its 500 holdings, with the largest holding, Datadog Inc. (DDOG), representing only 1.51% of the portfolio. That said, the fund is still designed for longer-term investors who can afford to take a higher-risk/higher-reward stance.
BNY Mellon Core Bond ETF (BKAG)
You can find fee-free ETFs in the fixed-income sector, too, such as the BNY Mellon Core Bond ETF. The fund tracks the Bloomberg Barclays US Aggregate Total Return Index, giving investors broad exposure to the U.S. bond market with 1,840 holdings. It provides monthly distributions and has a current yield of 1.65%. It tends to be on the conservative side relative to other intermediate-term bond funds, with a slant toward Treasurys over corporate bonds. Nearly 70% of the portfolio is in AAA-rated bonds, with nothing rated below BBB in its holdings.
Gabelli Love Our Planet & People ETF (LOPP)
Launched in January 2021, the Gabelli Love Our Planet & People ETF is one of the newer sustainable investments available. It focuses on the E, or environment, in ESG by investing in companies with sustainable practices for the good of the planet, such as renewable energy, clean mobility, and waste reduction or recycling. LOPP invests no less than 80% of its portfolio in U.S.-listed companies that meet these criteria. The fund’s advisor is waiving the expense ratio on the first $100 million invested in the fund, for at least one year. With only $11.2 million invested so far, this means there’s still plenty of opportunity to invest expense ratio free. When the waiver ends, the fund will have a 0.9% expense ratio, putting it above average in terms of cost.
Invesco Nasdaq Biotechnology ETF (IBBQ)
IBBQ tracks the Nasdaq Biotechnology Index, which includes Nasdaq-listed companies in biotechnology or pharmaceuticals. These can be companies of any size. IBBQ’s portfolio has a nice spread across large-, mid- and small-cap stocks. It’s entirely invested in the health care sector, with top holdings including familiar names like Moderna Inc. (MRNA) and Gilead Sciences Inc. (GILD). Worth noting is the low trading volume on this fund. With only 18,000 shares trading hands on average each day, the fund could have a large trading spread and investors with large holdings may find selling a challenge. The fund is still new, however, having launched in June 2021. Invesco is waiving the fund’s expense ratio through at least Dec. 17, after which you may see it rise to 0.19%.
Invesco PHLX Semiconductor ETF (SOXQ)
Invesco is also waiving the 0.19% expense ratio on SOXQ through at least Dec. 17. Tracking the PHLX Semiconductor Sector Index, the fund holds the 30 largest U.S.-listed companies in the semiconductor business. These include Nvidia Corp. (NVDA), Broadcom Inc. (AVGO), Qualcomm Inc. (QCOM), Texas Instruments Inc. (TXN) and Intel Corp. (INTC). As with IBBQ, SOXQ has yet to gain much traction since being launched in June 2021. The fund has only $68.2 million in assets under management and trades at less than 30,000 shares per day on average. That said, Morningstar’s analysts have faith in the fund managers, who help it earn a “bronze” rating.
7 no-fee ETFs to hang on to all of your returns:
— BNY Mellon US Large Cap Core Equity ETF (BKLC)
— SoFi Select 500 ETF (SFY)
— SoFi Next 500 ETF (SFYX)
— BNY Core Bond ETF (BKAG)
— Gabelli Love Our Planet & People ETF (LOPP)
— Invesco Nasdaq Biotechnology ETF (IBBQ)
— Invesco PHLX Semiconductor ETF (SOXQ)
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7 No-Fee ETFs to Maximize Your Returns originally appeared on usnews.com
