Kip ETF 20: The 20 Best Cheap ETFs You Can Buy
Exchange-traded funds (ETFs) are growing at an astronomical rate. U.S. assets are closing in on $4 trillion. The ETF share of total assets at investment firms has expanded to nearly 16% from 8% at the start of the decade, while mutual funds have lost market share. The only problem with this explosive growth? The industry now boasts thousands of funds, making it difficult to determine the very best ETFs.
But investors are getting smarter about how they use ETFs in their portfolios. "After a decade of market gains, ETFs now play a unique role for investors as the foundation of a portfolio and also as vehicles that enable investors to be nimble," says Kari Droller, who oversees third-party mutual funds and ETFs at Charles Schwab.
We see a need to be nimble at present, so we're making some changes to our Kiplinger ETF 20 list of our favorite ETFs (with an eye toward small fees). Out are iShares Edge MSCI USA Momentum (MTUM), Vanguard Russell 2000 Value ETF (VTWV), Vanguard FTSE All-World ex-US Small Cap ETF (VSS) and Invesco Dynamic Large Cap Value (PWV).
So what's in? Some of the newcomers are meant to cushion your portfolio in a market downturn. One new entrant is simply a better strategy for investing in small-company stocks; another is a way to buy into some of the most innovative trends of our time.
Read on for our analysis of the 20 best ETFs that allow investors to tackle various strategies at a low cost - including the four newest additions to the list.
NEW ADDITION: Invesco S&P SmallCap Low Volatility
Market value: $2.0 billion
Yield: 2.7%
Expense ratio: 0.25%, or $25 per $10,000 invested
Trades commission-free at: Fidelity, Firstrade, Schwab, TD Ameritrade, Vanguard
Small-cap stocks tend to produce bumpy returns. Over the past decade, the Russell 2000 small-company stock index has been 37% more volatile than the S&P 500. Invesco S&P SmallCap Low Volatility (XSLV, $48.80) is designed to smooth out the ride. So far, so good: Since this ETF launched in early 2013, it has outpaced two small-company stock benchmarks - the Russell 2000 and the S&P SmallCap 600 - on an annualized basis, with less volatility.
There are cheaper options, but none as steady. Over the past five years, the ETF has
