The market for index funds continues to grow, and aside from the sheer variety of choices now available to retail investors, one of the biggest benefits has been steadily decreasing fees.
In August 2023, State Street Global Advisors made a splash by cutting expense ratios on 10 exchange-traded funds (ETFs) within their SPDR Portfolio ETF lineup.
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At the time, the affected ETFs managed $77 billion in assets under management (AUM). The largest of the group, the SPDR Portfolio S&P 500 ETF (ticker: SPLG), had its expense ratio cut to just 0.02%, making it one of the cheapest ways to gain exposure to the S&P 500.
Not to be outdone, in February 2025, Vanguard, one of State Street’s main competitors, implemented its own fee reductions. According to the firm, Vanguard cut fees on 168 share classes across 87 funds, resulting in an estimated $350 million in annual savings for investors.
For investors, these fee reductions are a clear win. Asset managers have recognized that investors care about costs, leading to an ongoing race to outcompete rivals by offering lower-cost products.
If you are comparing funds, it therefore makes sense to include expense ratios as a top screening criterion, especially when it comes to core holdings.
Most of the lowest-cost funds are passive funds, meaning they track a benchmark index rather than actively managing a portfolio. These benchmarks might be licensed from a third party, such as S&P Global Inc. (SPGI), or developed in-house.
This passive approach keeps fees low because it is easy to create a portfolio that simply mirrors the index. The process can also be automated, with minimal need for ongoing research or active trading to outperform the market.
“The returns of the market have been driven by a small percentage of big winners,” says Robert Johnson, professor of finance at Creighton University’s Heider College of Business. “For most, trying to pick winners ex-ante is a loser’s game, so the solution is to invest in diversified index funds where you don’t have to pick the winners.”
Here are 10 of the best low-cost index funds to buy today:
| Fund | Expense ratio |
| Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) | 0.04% |
| Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) | 0.09% |
| Vanguard Total World Stock Index Fund Admiral Shares (VTWAX) | 0.09% |
| Fidelity ZERO Total Market Index Fund (FZROX) | 0% |
| BNY Mellon US Large Cap Core Equity ETF (BKLC) | 0% |
| Vanguard Dividend Appreciation ETF (VIG) | 0.05% |
| Schwab U.S. Dividend Equity ETF (SCHD) | 0.06% |
| Xtrackers S&P 500 Scored & Screened ETF (SNPE) | 0.10% |
| Invesco Nasdaq 100 ETF (QQQM) | 0.15% |
| Invesco S&P 500 Equal Weight ETF (RSP) | 0.20% |
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)
“Index funds can help investors achieve long-term success through their low costs, broad diversification, low turnover and relative predictability,” says Rodney Comegys, global head of the equity indexing group at Vanguard. Vanguard’s flagship U.S. equity index fund is VTSAX, which charges a 0.04% expense ratio.
This mutual fund tracks the CRSP US Total Market Index, a broad benchmark of more than 3,600 market-cap-weighted stocks spanning all 11 stock market sectors. If you want to avoid the $3,000 minimum required investment, Vanguard also offers this fund as the Vanguard Total Stock Market ETF (VTI).
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)
“Beating the market is a zero-sum game — it’s impossible for all investors in aggregate to outperform the market, as investors can’t all be above average,” Comegys says. When it comes to investing, “average” isn’t bad — earning a 6% to 8% annualized real return long term can help most investors meet their goals.
Achieving an “average” return is easier if investors diversify with an international stock fund. If the U.S. market lags, as it has so far in 2025 compared to European markets, international stocks can help. VTIAX provides exposure to more than 8,500 such companies at a competitive 0.09% expense ratio.
Vanguard Total World Stock Index Fund Admiral Shares (VTWAX)
“Broad-market index funds use highly efficient investment strategies with minimal portfolio turnover, which means fewer taxable capital gains distributions for investors,” Comegys says. For example, VTWAX has a low portfolio turnover rate of just 2.8% despite holding more than 9,800 stocks.
This fund tracks the FTSE Global All Cap Index, which features a 65% allocation to U.S. equities and the rest split between international developed and emerging markets. For a 0.09% expense ratio and a $3,000 minimum, investors can seamlessly invest in the world economy with just a single ticker.
Fidelity ZERO Total Market Index Fund (FZROX)
“Just as how the stock market returns compound, the deleterious effects of high fees and transaction costs also stack up over time,” Johnson says. “In fact, the late founder and chairman of Vanguard, John Bogle, termed this phenomenon ‘the tyranny of compounding costs.'”
Investors wishing to eliminate costs entirely may like FZROX. On Fidelity’s brokerage platform, this fund has a true 0% expense ratio, along with no minimum required investments or transaction fees. It holds more than 2,500 stocks represented by the proprietary Fidelity U.S. Total Investable Market Index, which essentially aims to capture the returns of the broad U.S. stock market.
BNY Mellon US Large Cap Core Equity ETF (BKLC)
The SPDR Portfolio S&P 500 ETF might charge a low 0.02% expense ratio, but some ETFs undercut even that figure. A great example is BKLC, which tracks the Solactive GBS United States 500 Index with a 0% expense ratio. This index provides very similar U.S. core equity exposure to the S&P 500, but with much lower licensing costs.
BLKC has been a strong performer. Over the last three years, the ETF has delivered a 13.3% annualized return, outperforming the Solactive GBS United States 500 Index that it aims to track, which returned 12.5%. This was in part due to income generated from securities lending, which helped buoy performance.
[Read: 5 Best S&P 500 Index Funds to Buy Now]
Vanguard Dividend Appreciation ETF (VIG)
“A consistently increasing dividend can be a signal of a firm’s strong balance sheet, disciplined capital allocation and commitment to returning value to shareholders,” Comegys says. For example, the S&P U.S. Dividend Growers Index tracked by VIG requires 10 consecutive years of dividend growth.
VIG was one of the 87 Vanguard funds that recently benefited from an expense ratio reduction. Now costing just 0.05%, it is one of the cheapest dividend index ETFs available on the U.S. market, and it pays a 1.7% 30-day SEC yield to boot.
Schwab U.S. Dividend Equity ETF (SCHD)
Despite charging a low 0.06% expense ratio, SCHD is actually quite sophisticated. This ETF tracks the Dow Jones U.S. Dividend 100 Index, which screens for 10 years of consecutive dividend payments before evaluating stocks based on their free cash flow, return on equity, yield and dividend growth rate.
This composite screener results in an equally weighted portfolio of 100 stocks that possess both above-average yields along with dividend growth and quality. The ETF currently pays a 3.8% 30-day SEC yield and has delivered an annualized 11.3% total return over the trailing 10-year period.
Xtrackers S&P 500 Scored & Screened ETF (SNPE)
Even environmental, social and governance (ESG)-conscious investors can benefit from low-cost index funds. A great example is SNPE, which tracks the S&P 500 Scored & Screened Index for a 0.1% expense ratio. This ETF has outperformed the S&P 500 over trailing five- and three-year periods.
“Some ESG strategies may rely on sector tilts, underweighting or omitting sectors such as energy and industrials,” notes Arne Noack, regional investment head of Xtrackers, Americas, at DWS Group. “SNPE’s methodology focuses on the best-in-class companies while maintaining industry group weightings.”
Invesco Nasdaq 100 ETF (QQQM)
Growth investing can be cheap, too. For a 0.15% expense ratio, investors can own the Nasdaq-100 index via QQQM. This ETF holds all the “Magnificent Seven” stocks in its top holdings and has a high allocation to the technology sector, at about 50%. It’s returned an annualized 17.9% over the last decade.
“These companies are known for a high level of spending on research and development, which has led to patent discovery and innovative technologies,” says Nick Kalivas, head of factor and core equity ETF strategy at Invesco. “The R&D spend has contributed to strong growth in sales, earnings and dividends.”
Invesco S&P 500 Equal Weight ETF (RSP)
“The U.S. equity market is more concentrated than at any point in the last half century,” says Chris Dahlin, factor and core equity ETF strategist at Invesco. “The 10 largest companies in the S&P 500 now comprise nearly 40% of the index’s total value.” Thanks to RSP, there’s an easy and affordable alternative.
This ETF holds the usual S&P 500 stocks, but weights them equally instead of by market cap. As a result, all 500 or so stocks receive a 0.2% allocation during quarterly rebalances. This mitigates the risk of concentration in a handful of tech sector mega-caps. RSP charges a 0.2% expense ratio.
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10 Best Low-Cost Index Funds to Buy originally appeared on usnews.com
Update 03/14/25: This story was published at an earlier date and has been updated with new information.
