Index funds are popular with investors for many reasons, including providing access to a diverse portfolio at lower risk with minimal expenses incurred compared to individual stocks. That is why new investors often consider index funds superior investments.
Every evening, financial news shows will cover one or more of the world’s most watched indexes: S&P 500 (S&P 500), Nasdaq Composite and Dow Jones Industrial Average are just three. Investors frequently track these indexes in order to gauge how stocks all together are performing.
Here’s everything you need to know about index funds, including ten of the best ones to consider adding to your portfolio this year.
Best Index Funds For April 2022
The list below features index funds from multiple companies tracking different widely diversified indexes and are among the lowest cost funds you can trade on public markets. One of the primary factors affecting total returns when it comes to index funds such as these is cost – here we include three mutual funds and seven ETFs:
- Fidelity ZERO Large Cap Index
- Shelton NASDAQ-100 Index Direct
- Invesco QQQ Trust ETF
- Vanguard S&P 500 ETF
- SPDR S&P 500 ETF Trust
- Vanguard Russell 2000 ETF
- iShares Core S&P 500 ETF
- Schwab S&P 500 Index Fund
- Vanguard Total Stock Market ETF
- SPDR Dow Jones Industrial Average ETF Trust
- Fidelity ZERO Large Cap Index (FNILX)
Fidelity’s Zero Large Cap Index mutual asset marks its introduction of zero expense ratio mutual funds, hence its “ZERO” moniker. Although technically, this asset doesn’t track the S&P 500 index; instead it follows Fidelity U.S. Large Cap Index; what matters is academic: what really counts is that investor-friendly Fidelity doesn’t incur licensing charges to use its namesake index name, thus keeping costs for investors lower than with competitors such as Vanguard or BlackRock.
Expense ratio: 0%. That means each $10,000 invested would cost $0 annually.
- Shelton NASDAQ-100 Index Direct (NASDX)
The Shelton Nasdaq-100 Index Direct ETF follows the performance of nonfinancial companies primarily found on the Nasdaq-100 Index. Trading began for this mutual asset back in 2000 and it has shown great results during that time.
Expense ratio: 0.5 percent. That means each $10,000 invested would cost $50 annually.
- Invesco QQQ Trust ETF (QQQ)
The Invesco QQQ Trust ETF is an index reserve that follows the performance of large nonfinancial companies within the Nasdaq-100 Index. Trading began for this asset back in 1999, managed by Invesco – a prominent asset management firm. Lipper found it was top performing large cap store over 15 years up until Sept 2021 with total return generating 20.21% total return, making this ETF top performer among large cap stores in terms of total return over that time period.
Expense ratio: 0.20 percent. That means each $10,000 invested would cost $20 annually.
- Vanguard S&P 500 ETF (VOO)
As its name implies, Vanguard S&P 500 ETF tracks the S&P 500 index and represents one of the world’s largest assets with hundreds of billions invested. Trading began for this ETF back in 2010 under Vanguard’s tutelage as one of the titans of asset management.
Expense ratio: 0.03 percent. That means each $10,000 invested would cost $3 annually.
- SPDR S&P 500 ETF Trust (SPY)
The SPDR S&P 500 ETF, founded back in 1993, helped kick-start ETF investing as we know it today, amassing more than $100 billion and being sponsored by State Street Global Advisors – another powerhouse in this industry – so as to track the S&P 500.
Expense ratio: 0.095 percent. That means each $10,000 invested would cost $9.50 annually.
- Vanguard Russell 2000 ETF (VTWO)
The Vanguard Russell 2000 ETF follows the Russell 2000 Index, an assortment of approximately 2,000 of the smallest U.S. public corporations. First introduced for trading in 2010, and managed by Vanguard Reserve so as to keep costs as low as possible for investors.
Expense ratio: 0.10 percent. That means each $10,000 invested would cost $10 annually.
- iShares Core S&P 500 ETF (IVV)
BlackRock sponsors an asset known as the iShares Core S&P 500 ETF that follows closely the S&P 500 index since 2000. As one of its flagship ETFs, this asset offers ample diversity. With an inception date of 2000 and long-term tracking performance to its credit, this ETF remains an effective long-term player that tracks closely.
Expense ratio: 0.03 percent. That means each $10,000 invested would cost $3 annually.
- Schwab S&P 500 Index Fund (SWPPX)
Schwab S&P 500 Index Fund may be one of the smaller funds on this list with assets in the billions; however that shouldn’t concern investors as much. Established back in 1997 and managed by Charles Schwab – one of the industry’s premier names. Schwab is particularly known for producing investor-friendly products; evidenced by its low expense ratio.
Expense ratio: 0.02 percent. That means each $10,000 invested would cost $2 annually.
- Vanguard Total Stock Market ETF (VTI)
Vanguard also provides an asset that covers effectively the entirety of public stocks in the U.S. – the Vanguard Total Stock Market ETF – consisting of small, mid and large companies across various sectors and having begun trading since 2001. Furthermore, its sponsor Vanguard ensures its costs remain manageable.
Expense ratio: 0.03 percent. That means each $10,000 invested would cost $3 annually.
- SPDR Dow Jones Industrial Average ETF Trust (DIA)
State Street Global Advisors’ ETF that tracks the Dow Jones Industrial Average is one of few options available; it was introduced back in 1998 and currently manages an asset of several tens of billions.
Expense ratio: 0.16 percent. That means each $10,000 invested would cost $16 annually.