Cheapest ETFs In Focus As Fee War Heats Up

(Video length 00:08:15)

The ETF price war has been escalating and spreading to all corners of the market.

Vanguard Group now offers commission-free trading on more than 1,800 ETFs, including ETFs from their competitors BlackRock (BLK), Schwab (SCHW), and State Street Global Advisors.

The list excludes inverse and leveraged ETFs since those are mainly intended for short-term trading or hedging whereas Vanguard is targeting long-term focused investors.

Last week, Fidelity launched two zero-fee index funds and also slashed fees on many existing index funds.

Recent fund flows clearly show that investors are becoming more cost conscious and moving their dollars to the cheapest ETFs.

These moves are also aimed at attracting new clients and then offering them other services, where they can make more money.

It is possible that we will see a zero fee ETF soon as fund managers are able to generate additional income by securities lending, which can be significant if done at scale. Further, operating costs also go down significantly with rise in assets.

We’re highlighting two cheapest ETFs that can be used by investors to get diversified exposure to the entire US equity market. These are excellent building blocks to create a diversified portfolio.

Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN) are the top holdings in these ETFs. Both Microsoft and Amazon are currently ranked #1 (Strong Buy) whereas Apple is #2 (Buy).

To learn more about the iShares Core S&P Total U.S. Stock Market ETF (ITOT – Free Report) and the Schwab U.S. Broad Market ETF (SCHB  – Free Report), please watch the short video above.