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.
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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 five no-fee ETFs to help you keep your investing costs down:
— BNY Mellon US Large Cap Core Equity ETF (ticker: BKLC)
— BNY Core Bond ETF (BKAG)
— Gabelli Love Our Planet & People ETF (LOPP)
— Gabelli Commercial Aerospace & Defense ETF (GCAD)
— Amplify Cash Flow Dividend Leaders ETF (COWS)
BNY Mellon US Large Cap Core Equity ETF (BKLC)
The BNY Mellon US Large Cap Core Equity ETF is a passively managed ETF that tracks the Solactive GBS United States 500 Index TR, which in turn tracks the performance of the 500 largest companies in the U.S. market. This amounts to a portfolio that looks a lot like the S&P 500 but with slight variations in company weights.
So if you want no-cost exposure to names like Microsoft Corp. (MSFT), Apple Inc. (AAPL) and Amazon.com Inc. (AMZN), it’s a good way to go. Just launched in April 2020, BKLC tends to be more volatile than the Morningstar large blend category, but also outperformed its peers by more than 8% in 2023.
BNY Mellon Core Bond ETF (BKAG)
Here’s another zero expense ratio BNY fund that could complement the previous one well. BKAG is designed to be a central component of your bond portfolio. The fund tracks the Bloomberg Barclays US Aggregate Total Return Index, giving investors broad exposure to the U.S. bond market with nearly 5,000 holdings.
It provides monthly distributions and has a current yield of 4.3%. It tends to be on the conservative side, with a slant toward Treasurys over corporate bonds. Over 70% of the portfolio is in AA-rated bonds, with nothing rated below BBB in its holdings.
[READ: 8 Best Warren Buffett Stocks to Buy in 2024]
Gabelli Love Our Planet & People ETF (LOPP)
Launched in early 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. These include utility and electrical solutions provider Hubbell Inc. (HUBB), electronics manufacturer Flex Ltd. (FLEX) and trash pickup service provider Waste Connections Inc. (WCN).
The fund’s usual management fee of 0.9% was waived for the first $100 million in net assets at least through April 30, 2024, and as of publication, the fee has continued to be waived. It currently has about $11.3 million in the portfolio, so this could be a good time to jump on board.
Gabelli Commercial Aerospace & Defense ETF (GCAD)
Gabelli is offering a similar expense fee waiver on its Commercial Aerospace & Defense ETF. The fund’s advisor agreed to waive its 0.9% management fee on the first $25 million in net assets for one year from inception. GCAD launched in January 2023, but it’s still waiving the fee. It currently has only about $5.7 million in assets.
The fund aims to profit from global commercial aerospace and defense industry growth by investing in companies like aerospace manufacturers Spirit Aerosystems Holdings Inc. (SPR) and Lockheed Martin Corp. (LMT) as well as the airline Boeing Co. (BA). Having only been around for less than two years, it’s hard to judge the effectiveness of management’s strategy. The fund has returned 15.4% year to date.
An important note about GCAD is that in addition to being small in size, it’s very thinly traded. The average daily trading volume is less than 1,000 shares. This could make it difficult to sell your shares if and when you decide to part ways.
Amplify Cash Flow Dividend Leaders ETF (COWS)
As the name suggests, the Amplify Cash Flow Dividend Leaders ETF invests primarily in companies with high free cash flow (FCF) that pay regular and growing dividends. Having high FCF suggests a company has enough cash to cover monthly costs. This in turn should enable it to pay out more proceeds to investors. COWS currently pays a monthly distribution rate of 2.4%.
COWS is an equal-weight portfolio, meaning each holding accounts for the same proportion of the total. This combined with the fact that the fund caps exposure to any one industry at 24% should create a more diversified portfolio. That said, both the consumer cyclical sector at approximately 26%, and energy sector at 23.2%, are pushing this boundary.
The fund’s expense ratio is waived until at least Sept. 11, 2024. After this, it may start charging 0.39% per year.
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5 No-Fee ETFs to Maximize Your Returns originally appeared on usnews.com
