When it comes to exchange-traded funds (ETFs), expenses matter a lot. The low-cost providers tend to stand out among investors. While there are tons of ETFs to choose from, BlackRock, Charles Schwab and Vanguard are getting accolades in Forbes' list of the best ETFs for 2018.
Take BlackRock, Inc. (BLK), one of the world's largest fund managers, for starters. According to Forbes, BlackRock's iShares family of ETFs are the cheapest, costing $6 on a $10,000 investment over the course of a decade for investors looking to gain exposure to all of the U.S. stock market. For those looking for bonds, Forbes said that The Charles Schwab Corporation's (SCHW) ETFs are the cheapest, costing $85 over a 10-year period for the same $10,000 investment. For small foreign stocks, Vanguard was the winner, with Forbes finding the cost actually to be negative. Forbes' list of the best ETFs covers 737 funds that have $10 million or more in assets and expense ratios no higher than 0.4%, which means around 1,100 funds were not included because they were either too small or too expensive to be considered.
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New this year, Forbes added an Honor Roll list of 64 funds that combine "excellent cost efficiency with liquidity." Among the ETFs to make it on the Honor Roll were 17 from Vanguard, including the Total Stock Market ETF (VTI), which has $95 billion in assets and costs $35 over a 10-year period. Meanwhile, 17 of BlackRock's iShares family of ETFs made it on the Honor Roll list, with the largest being the Core U.S. Aggregate Bond (AGG), which has $55 billion in assets and costs $78 over a 10-year time frame. Of Charles Schwab's ETFs, 12 landed on the Honor Roll list, with the largest being the Schwab U.S. Broad Market ETF (SCHB), which has a cost of $78 over 10 years.
The ranking from Forbes comes at a time when demand for ETFs is exploding, particularly among millennial investors. A recent survey by Charles Schwab found that 91% of investors in that age group favor that type of investing over other investment vehicles. What's more, the brokerage found that 42% of millennials said they are invested in ETFs, with 56% of investors in that generation saying they have replaced all individual stocks in their portfolios with ETFs. Close to 80% of millennials see ETFs as the main investment vehicle in the future, with 74% of millennials saying that they expect to increase investments in ETFs during the next year and 54% signaling that they would be open to putting all of their investments in ETFs during the next year.