Index funds are popular with investors because they promise ownership of a wide variety of stocks, greater diversification and lower risk – usually all for a minimal expense. That’s the reason many investors, especially beginners, find index funds to be superior investments to individual stocks.
Some of the most watched indexes top off the financial news each evening, whether it’s the Standard and Poor’s 500 (S&P 500), the Nasdaq Composite, or the Dow Jones Industrial Average. These indexes are often shorthand for the performance of the market, and investors track them to understand how stocks all in all are faring.
Here’s everything you really want to be familiar with index funds, including ten of the top ones to consider adding to your portfolio this year.
Best index funds for April 2022
The list underneath includes index funds from a variety of companies tracking a variety of broadly diversified indexes and it includes some of the lowest-cost funds you can trade on the public markets. With regards to index funds like these, one of the most important factors in your total return is cost. Included are 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)
The Fidelity ZERO Large Cap Index mutual asset is part of the investment company’s foray into mutual funds with no expense ratio, thus its ZERO moniker. The asset doesn’t officially track the S&P 500 – technically it follows the Fidelity U.S. Large Cap Index – yet the thing that matters is academic. The real contrast is that investor-accommodating Fidelity doesn’t have to hack up a licensing charge to use the S&P name, keeping costs lower for investors.
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 tracks the performance of the largest non-financial companies in the Nasdaq-100 Index, which includes primarily tech companies. This mutual asset began trading in 2000 and has a strong record in the course of the last five and a decade.
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 another index reserve that tracks the performance of the largest non-financial companies in the Nasdaq-100 Index. This ETF started trading in 1999, and it’s managed by Invesco, an asset giant. This asset is the top-performing large-cap store in terms of total return over the 15 years to Sept. 2021, according to Lipper.
Expense ratio: 0.20 percent. That means each $10,000 invested would cost $20 annually.
- Vanguard S&P 500 ETF (VOO)
As its name suggests, the Vanguard S&P 500 tracks the S&P 500 index, and it’s probably the largest asset on the market with hundreds of billions in the asset. This ETF began trading in 2010, and it’s backed by Vanguard, one of the powerhouses of the asset industry.
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 is the granddaddy of ETFs, having been established all the way back in 1993. It helped start off the wave of ETF investing that has become so popular today. With hundreds of billions in the asset, it’s among the most popular ETFs. The asset is sponsored by State Street Global Advisors – another heavyweight in the industry – and it tracks 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 tracks the Russell 2000 Index, an assortment of about 2,000 of the smallest public corporations in the U.S. This ETF began trading in 2010, and it’s a Vanguard reserve, so it focuses on keeping costs low for investors.
Expense ratio: 0.10 percent. That means each $10,000 invested would cost $10 annually.
- iShares Core S&P 500 ETF (IVV)
The iShares Core S&P 500 ETF is an asset sponsored by one of the largest asset companies, BlackRock. This iShares reserve is probably the largest etf and it tracks the S&P 500. With an inception date of 2000, this asset is another long-tenured player that’s tracked the index closely over the long haul.
Expense ratio: 0.03 percent. That means each $10,000 invested would cost $3 annually.
- Schwab S&P 500 Index Fund (SWPPX)
With tens of billions in assets, the Schwab S&P 500 Index Fund is on the smaller side of the heavyweights on this list, however that’s not really a worry for investors. This mutual asset has a strong record dating back to 1997, and it’s sponsored by Charles Schwab, one of the most respected names in the industry. Schwab is especially noted for its focus on making investor-accommodating products, as proven by this asset’s razor-thin 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 offers an asset that covers successfully the whole universe of public stocks in the U.S., known as the Vanguard Total Stock Market ETF. It consists of small, medium and large companies across all sectors. The asset has been around for some time, having started trading in 2001. And with Vanguard as the sponsor, you realize the costs are going to be low.
Expense ratio: 0.03 percent. That means each $10,000 invested would cost $3 annually.
- SPDR Dow Jones Industrial Average ETF Trust (DIA)
You don’t have a ton to choose from with regards to ETFs tracking the Dow Jones Industrial Average, however State Street Global Advisors comes through with this store that tracks the 30-stock index of large-cap stocks. The asset is definitely one of the earlier ETFs, having appeared in 1998, and it has tens of billions under management.
Expense ratio: 0.16 percent. That means each $10,000 invested would cost $16 annually.