When it comes to long-term investing, minimizing costs is one of the most effective ways to boost returns. One of the simplest cost metrics investors can evaluate is the expense ratio—the annual fee that ETFs charge as a percentage of your investment. Even a fraction of a percentage point can compound into thousands of dollars in lost returns over decades.
In this guide, we'll break down the ETFs with the lowest expense ratios in 2025, how to assess their value, and which ones offer strong performance and diversification with ultra-low fees. We’ll also provide expert advice and tips to help you build a lean, cost-efficient portfolio.
What Is an ETF Expense Ratio?
The expense ratio is the annual fee expressed as a percentage of the fund’s average assets under management (AUM). For example, an ETF with a 0.03% expense ratio charges $3 per year for every $10,000 invested.
Lower expense ratios:
- Increase your net returns
- Make long-term compounding more effective
- Are especially important for passive index investors
Top ETFs with the Lowest Expense Ratios in 2025
Here's a list of popular ETFs with ultra-low fees, ideal for cost-conscious investors:
| ETF Name | Ticker | Expense Ratio | Asset Class | Issuer |
|---|---|---|---|---|
| Vanguard S&P 500 ETF | VOO | 0.03% | Large-Cap U.S. Equity | Vanguard |
| Schwab U.S. Broad Market ETF | SCHB | 0.03% | Total U.S. Stock Market | Charles Schwab |
| iShares Core S&P Total U.S. Stock Market ETF | ITOT | 0.03% | Total U.S. Stock Market | BlackRock |
| SPDR Portfolio S&P 500 ETF | SPLG | 0.02% | Large-Cap U.S. Equity | State Street |
| Fidelity ZERO Total Market Index Fund | FZROX | 0.00% | Total U.S. Stock Market | Fidelity |
| Vanguard Total Bond Market ETF | BND | 0.03% | U.S. Bonds | Vanguard |
| iShares Core U.S. Aggregate Bond ETF | AGG | 0.03% | U.S. Bonds | BlackRock |
Fund Profiles and What to Know
1. VOO (Vanguard S&P 500 ETF)
- Tracks: S&P 500
- Best For: Long-term investors seeking low-cost U.S. equity exposure
- Why It’s Great: Extremely liquid, widely trusted, and backed by Vanguard
2. SCHB (Schwab U.S. Broad Market ETF)
- Tracks: Dow Jones U.S. Broad Stock Market Index
- Best For: Investors who want exposure to the entire U.S. stock market
- Why It’s Great: Offers nearly 2,500 holdings at a near-zero cost
3. ITOT (iShares Core Total U.S. Stock Market ETF)
- Tracks: S&P Total Market Index
- Best For: Those wanting a BlackRock alternative to SCHB and VTI
- Why It’s Great: Good liquidity and tax-efficiency
4. SPLG (SPDR Portfolio S&P 500 ETF)
- Tracks: S&P 500
- Best For: Budget-focused investors looking for the cheapest S&P 500 exposure
- Why It’s Great: Lower cost than VOO with similar performance
5. FZROX (Fidelity ZERO Total Market Index Fund)
- Tracks: Proprietary Fidelity U.S. Total Market Index
- Best For: Fidelity users building retirement or taxable portfolios
- Why It’s Great: 0.00% expense ratio, though only available through Fidelity
6. BND (Vanguard Total Bond Market ETF)
- Tracks: Bloomberg U.S. Aggregate Bond Index
- Best For: Conservative investors seeking core bond exposure
- Why It’s Great: Offers broad bond diversification at a minimal cost
7. AGG (iShares Core U.S. Aggregate Bond ETF)
- Tracks: Bloomberg U.S. Aggregate Bond Index
- Best For: Core bond allocation in retirement or balanced portfolios
- Why It’s Great: One of the most widely used bond ETFs globally
ETF Expense Ratios: Why They Matter
A lower expense ratio doesn’t guarantee better returns, but it minimizes the drag on performance. For example:
| Investment | Expense Ratio | 30-Year Cost (on $100,000) |
| Fund A | 0.75% | $52,245 |
| Fund B | 0.05% | $3,592 |
Source: Vanguard hypothetical cost calculator
Over decades, a difference of even 0.50% can result in tens of thousands of dollars lost.
Expert Tips on Choosing Low-Cost ETFs
1. Look at Total Cost, Not Just Expense Ratio
- Factor in bid/ask spreads and tracking error.
- Some “low-cost” ETFs may underperform their index or have wide spreads.
2. Match the ETF to Your Investment Goals
- Total market ETFs are great for core exposure.
- Bond ETFs can stabilize a portfolio.
- International ETFs add global diversification.
3. Consider Tax Efficiency
- ETFs are generally tax-efficient due to in-kind creation/redemption.
- Index ETFs typically generate fewer capital gains.
4. Review Issuer Stability and AUM
- Choose ETFs from reliable issuers (Vanguard, iShares, Schwab).
- Larger AUM often means better liquidity and lower spreads.
5. Don’t Over-Diversify
- Buying multiple ETFs tracking the same index increases complexity without benefit.
How to Build a Low-Cost ETF Portfolio
Here’s a sample portfolio using ultra-low-cost ETFs:
| Allocation | ETF | Ticker | Expense Ratio |
| 50% | Vanguard S&P 500 ETF | VOO | 0.03% |
| 20% | Vanguard Total Bond Market ETF | BND | 0.03% |
| 15% | iShares Core MSCI EAFE ETF | IEFA | 0.07% |
| 10% | Vanguard FTSE Emerging Markets ETF | VWO | 0.08% |
| 5% | iShares Core U.S. REIT ETF | USRT | 0.08% |
Weighted Average Expense Ratio: ~0.041%
This diversified, global portfolio costs less than $5 annually for every $10,000 invested.
FAQs About Low-Cost ETFs
Q1: Are low-cost ETFs better than mutual funds?
Often yes—especially for taxable accounts—due to lower costs and tax efficiency.
Q2: Do low fees mean lower returns?
Not necessarily. Many low-cost index ETFs outperform actively managed funds over time.
Q3: Can I buy these ETFs on any platform?
Most are available on platforms like Fidelity, Vanguard, Schwab, E*TRADE, and TD Ameritrade.
Q4: Should I only invest in the cheapest ETF?
No. Always match the ETF to your strategy and check liquidity, tracking, and issuer reputation.
Q5: Are zero-fee ETFs sustainable?
Funds like FZROX are subsidized by firms aiming to attract assets. Long-term sustainability depends on the provider’s broader strategy.
Final Thoughts
In 2025, low-cost ETFs remain the backbone of efficient, diversified portfolios. While the competition among issuers has driven expenses near zero, investors must still evaluate fund structure, tracking accuracy, tax implications, and how each ETF fits into their financial goals.
By choosing ETFs with rock-bottom expense ratios, you can retain more of your returns—and build wealth faster over time. Whether you’re just starting out or rebalancing a million-dollar portfolio, cost control is one edge you can always count on.
Related Reads:
- "Best All-in-One ETFs for Long-Term Investing"
- "How to Rebalance a Portfolio with ETFs"
- "Mutual Funds vs. ETFs: Which Is Right for You?"