Last updated: July 2026
This article is for informational purposes only and is not investment advice. See our full Disclaimer for details.
Expense ratios have been in a near-continuous decline for two decades. The average equity mutual fund charged close to 1.00% in the year 2000; today, the broad ETF industry average has fallen to roughly 0.16%, and the cheapest core index funds now charge a fraction of even that. Some charge literally nothing. This guide is a direct, cost-first comparison of the cheapest ETFs across the major categories most investors actually need, along with the caveats worth knowing before chasing the absolute lowest number.
New to ETFs generally? Our What Is an ETF? guide covers the basics first.
How We Evaluate “Low-Cost”
Expense ratio is the headline number in this article, but it isn’t the only cost that matters. We also considered liquidity (trading volume and bid-ask spread), how closely each fund tracks its underlying index, and structural factors like whether a fund can be easily transferred between brokerages — since the single cheapest fund on paper isn’t automatically the right choice if it comes with meaningful trade-offs elsewhere. Figures below are sourced from each issuer’s official fund page and public ETF data providers.
The Cheapest Fund in Each Major Category
| Category | Cheapest option(s) | Expense Ratio |
|---|---|---|
| S&P 500 | SPYM (SPDR Portfolio S&P 500 ETF, formerly SPLG) | 0.02% |
| S&P 500 (alternative) | VOO, IVV | 0.03% |
| Total U.S. stock market | VTI, SCHB | 0.03% |
| Total international stock market | VXUS, SCHF (region-specific pricing varies) | 0.03%–0.05% |
| Total U.S. bond market | BND, AGG | 0.03% |
| Zero-fee option (mutual fund, not ETF) | Fidelity ZERO funds (FZROX, FZILX, FNILX) | 0.00% |
Figures are approximate and change as issuers compete on price — this category in particular has seen frequent fee cuts in recent years. Always confirm current expense ratios on each issuer’s official fund page before investing.
1. SPDR Portfolio S&P 500 ETF (SPYM, formerly SPLG) — Cheapest S&P 500 Fund
At a 0.02% expense ratio, SPYM currently holds the title of cheapest S&P 500 index ETF — a basis point below VOO or IVV. On a $100,000 investment, that’s a difference of roughly $10 a year compared to VOO, and effectively nothing compared to the fund’s own long-term returns.
Worth knowing: All three funds — SPYM, VOO, and IVV — track the same S&P 500 Index and hold essentially identical underlying companies. For a fund this close to its category peers in construction, the marginal expense ratio difference is a legitimate tiebreaker, but it’s a small one; liquidity, brokerage availability, and existing holdings matter too.
Best for: Cost-focused investors specifically comparing pure S&P 500 exposure, for whom every basis point matters.
2. Vanguard S&P 500 ETF (VOO) and iShares Core S&P 500 ETF (IVV) — The Established Alternatives
VOO and IVV both charge 0.03% and offer the deep liquidity, long track record, and broad brokerage availability that come with being among the largest ETFs in the world — a factor that matters more for larger trades or investors who value maximum trading flexibility. We cover VOO in more detail throughout this site, including our VOO vs VTI comparison.
Worth knowing: The one-basis-point gap between these funds and SPYM is genuinely negligible for most long-term, buy-and-hold investors — the difference in liquidity, brand recognition, and existing ecosystem (options markets, brokerage promotions) can reasonably outweigh $10 a year on a $100,000 position for many investors.
Best for: Investors who want maximum liquidity and broad familiarity, willing to pay a marginal one-basis-point premium over the very cheapest option.
3. Vanguard Total Stock Market ETF (VTI) and Schwab U.S. Broad Market ETF (SCHB) — Cheapest Total Market Funds
For investors who want the entire U.S. market rather than just the S&P 500’s large-cap slice, VTI and SCHB both charge 0.03%, offering broad exposure across large, mid, and small-cap U.S. companies.
Worth knowing: SCHB tracks a slightly different index than VTI, with a modestly smaller total holdings count, though the practical difference in exposure and performance between the two has historically been minor. As with the S&P 500 comparison above, brokerage ecosystem and existing familiarity often matter more than the underlying index methodology differences.
Best for: Investors who want the broadest possible single-fund U.S. equity exposure at the lowest available cost.
4. Vanguard Total International Stock ETF (VXUS) and Schwab International Equity ETF (SCHF) — Cheapest International Options
International index funds have historically carried a small premium over U.S.-only funds, reflecting the added complexity of tracking companies across many countries and currencies. That premium has been shrinking — Schwab cut its SCHF expense ratio to 0.03% in 2026, matching or undercutting some previously cheaper alternatives, while VXUS sits at 0.05%.
Worth knowing: International funds vary more in what they actually hold (developed-only vs. developed-plus-emerging, different regional weightings) than the S&P 500 funds compared above, where the underlying index is identical across providers. For international exposure specifically, comparing what a fund holds matters at least as much as comparing its expense ratio. We cover this in more depth in our VTI vs VXUS guide.
Best for: Cost-conscious investors building international exposure, with the reminder to confirm the fund’s actual country and market-cap coverage, not just its fee.
5. Vanguard Total Bond Market ETF (BND) and iShares Core U.S. Aggregate Bond ETF (AGG) — Cheapest Core Bond Funds
Both BND and AGG charge 0.03%, tracking nearly identical broad, investment-grade U.S. bond indexes. We cover these funds, along with more specialized bond options, in our Best Bond ETFs guide.
Worth knowing: As with the S&P 500 comparison, BND and AGG are close enough in construction and cost that the choice mostly comes down to brokerage preference rather than a meaningful difference in what you’re actually getting.
Best for: Investors wanting the lowest-cost core bond holding to complement a low-cost equity allocation.
The Zero-Fee Option: Fidelity ZERO Funds
Fidelity’s ZERO fund lineup — including the Fidelity ZERO Total Market Index Fund (FZROX), Fidelity ZERO International Index Fund (FZILX), and Fidelity ZERO Large Cap Index Fund (FNILX) — carries a genuine 0.00% expense ratio, achieved by tracking Fidelity’s own proprietary indexes rather than licensing a benchmark like the S&P 500.
The catch: These are mutual funds, not ETFs, and they come with real structural trade-offs worth understanding before choosing them purely because “free” sounds better than “0.02%”:
- They can’t be transferred in-kind to another brokerage. If you ever move from Fidelity to another broker, you’d need to sell your ZERO fund holdings first — which can trigger a taxable capital gains event in a regular brokerage account (this doesn’t apply inside a tax-advantaged account like an IRA).
- No intraday trading. As mutual funds, they’re priced once daily after market close, unlike an ETF you can trade throughout the day.
- Fidelity-only. These funds are only available if you’re a Fidelity customer, unlike an ETF you can generally hold at any brokerage.
Worth knowing: For a long-term Fidelity customer with no plans to switch brokerages, the ZERO funds genuinely eliminate expense ratio as a cost entirely. For anyone who values portability, or who might switch brokerages down the line, a very-low-cost ETF like SPYM, VTI, or a similar fund may be the more practical choice despite the small non-zero fee.
Best for: Committed long-term Fidelity customers specifically prioritizing the absolute lowest possible cost and comfortable with the mutual fund structure’s limitations.
Cheapest Isn’t Always the Right Answer
It’s worth being direct about the limits of a pure cost-first approach. Within the same category — say, S&P 500 funds — the cheapest option is close to a free upgrade, since two funds tracking the identical index hold nearly identical underlying companies; there’s little reason not to take the marginal savings. But cost comparisons across different categories or fund structures deserve more scrutiny:
- Liquidity matters for larger trades. A fund with lower trading volume can have a wider bid-ask spread, which can offset a small expense-ratio advantage if you’re making sizable trades.
- Index construction differs even within similar-sounding categories, particularly for international and total-market funds, where “cheapest” doesn’t tell you whether you’re getting the same underlying exposure.
- Account and brokerage compatibility matters, as illustrated by Fidelity’s ZERO funds — the cheapest fund on paper isn’t the cheapest choice if switching away from it later triggers an unplanned tax bill.
Why Cost Compounds More Than It Looks Like It Should
A one or two basis point difference looks trivial in a single year — a few dollars on a typical account balance. But expense ratios are deducted every single year, regardless of how the fund performs, which means the gap compounds over a multi-decade holding period. The difference between a 0.03% and a 0.75% expense ratio, for example, isn’t just “0.72% a year” — compounded over 30 years, that gap can meaningfully reduce your final balance, since the higher-cost fund’s fee drag compounds right alongside your returns, working against you every year rather than just once.
This is the core argument for prioritizing low-cost funds as your default starting point, particularly for a core, long-term holding you intend to keep for decades — the specific basis-point gap between two very cheap funds (0.02% vs. 0.03%) matters far less than the much larger gap between any of these funds and a typical actively managed alternative charging 0.75%-1.00% or more.
Which Approach Fits Your Situation?
Want the absolute cheapest ETF, category by category, with maximum brokerage flexibility: SPYM for S&P 500 exposure, VTI or SCHB for total market, BND or AGG for bonds.
Are a long-term Fidelity customer with no plans to switch brokerages: The Fidelity ZERO funds offer genuine zero-cost exposure, with the trade-offs described above.
Prioritize maximum liquidity and established track record over the last basis point of savings: VOO, IVV, or VTI remain excellent, extremely low-cost choices even without holding the single cheapest ticker in their category.
Frequently Asked Questions
Is a 0.01% expense ratio difference actually worth worrying about? For most individual investors with typical account sizes, the dollar difference between, say, 0.02% and 0.03% is small in absolute terms (roughly $1 per $10,000 invested per year). It’s a legitimate tiebreaker between otherwise identical funds, but it shouldn’t be the deciding factor if other considerations — liquidity, brokerage compatibility, existing holdings — point a different direction.
Are Fidelity’s zero-fee funds too good to be true? No, they’re genuine 0.00% expense ratio funds, achieved by tracking Fidelity’s own proprietary index rather than licensing a third-party benchmark. The trade-offs are structural (no in-kind transfers to other brokerages, mutual fund rather than ETF structure) rather than hidden costs.
Should I switch from VOO to a slightly cheaper fund like SPYM? For a fund already held in a taxable account with unrealized gains, switching could trigger a capital gains tax event that likely outweighs years of the marginal fee savings. Inside a tax-advantaged account like an IRA, switching has no tax consequence, making the decision simpler. This is general information, not personalized advice — a tax professional can help evaluate your specific situation.
Do lower-cost funds perform worse than more expensive ones? Not inherently. Passive index funds tracking the same or similar indexes generally perform very similarly regardless of expense ratio, since they’re not trying to beat the market through active stock-picking — the expense ratio is simply deducted from returns, meaning (all else equal) a lower-cost fund tracking the same index will generally outperform a higher-cost one over time, not underperform it.
Why do expense ratios keep falling? Major fund issuers — Vanguard, Fidelity, Schwab, BlackRock/iShares, and State Street — have been in sustained fee competition for over a decade, each cutting costs to attract and retain assets. This “race to zero” has generally benefited investors through consistently falling costs across nearly every core index fund category.
What’s the cheapest way to build a globally diversified portfolio? Combining the cheapest funds from each category covered in this article — for example, VTI or SCHB (U.S. stocks), VXUS or SCHF (international stocks), and BND or AGG (bonds) — can build a fully diversified portfolio at a blended expense ratio well under 0.05%, among the lowest-cost diversified portfolios achievable with widely available ETFs.
This article reflects publicly available fund data as of the “last updated” date above and is provided for informational purposes only — it is not a recommendation to buy or sell any security. Expense ratios change frequently as issuers compete on price; always verify current data directly on each issuer’s official fund page before making an investment decision. Read our full Disclaimer and Privacy Policy for more information.