The race to the bottom in the exchange-traded fund (ETF) price war has reached its (presumable) final destination, with a growing number of funds available to investors for no annual fee. These zero-fee funds and their ultra-low-fee competitors have the potential to improve long-term returns because they leave as much of the portfolio's return with the investor as possible. They make diversifying especially easy and inexpensive, and can still oftentimes offer robust exposure to a variety of sectors and industries.
On the other hand, zero-fee funds are not necessarily completely without cost, and investors may still have to pay brokerage expenses, transaction costs, and other indirect charges. It's therefore critical that investors not simply assume that a zero-fund fee actually costs them nothing. These funds, like all others, still need to make the case that they are worth more than they cost. Between broad portfolio access, a low-cost income strategy, and some of the least expensive access to the S&P 500, the ETFs below may make a compelling case that they bring more value to the table than their fees would suggest.
