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Cheapest S&P 500 Index Funds
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If you own an index fund and you’re paying an expense ratio greater than 0.35%, you’re getting ripped off. I created a list of index funds from major brokers, like Vanguard, Fidelity, and Schwab, looked up their expense ratios on Google Finance, and then listed them in the order from cheapest to most expensive.
None of the funds on the list have a sales load of any kind and I was surprised to find a fund as cheap as 0.09%. I was even more surprised to find index funds that charged over 1%. Check out State Farm S&P 500 Index B – it has a 1.49% expense ratio and a 5% deferred load! (a deferred load is a fee that is charged when you sell an asset) It has $425M in total assets too and each one of their customers is getting ripped off.
Cheapest S&P 500 Index Funds
| Fund Name | Ticker | Expense Ratio | Fund Minimum |
| Schwab S&P 500 Index Sel | SWPPX | 0.09% | $100 |
| Fidelity Spartan 500 Index | FSMKX | 0.10% | $10,000 |
| Columbia Large Cap Index Fund | NINDX | 0.14% | $2,500 |
| E*TRADE S&P 500 Index Fund | ETSPX | 0.16% | $5,000 |
| Vanguard 500 Index Fund | VFINX | 0.18% | $3,000 |
| SSgA S&P 500 Index | SVSPX | 0.18% | $10,000 |
| USAA S&P 500 Index Fund | USSPX | 0.26% | $3,000 |
| Vantagepoint 500 Stock Index II | VPSKX | 0.26% | $0 |
| DWS Equity 500 Index Fund | BTIEX | 0.32% | $2,500 |
| T. Rowe Price Equity Index 500 | PREIX | 0.35% | $2,500 |
If you know of an S&P 500 Index fund that should be on the list, please let me know.
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Fidelity Spartan 500 Index Advantage Class is 0.07% with a $100,000 minimum.
A $100,000 minimum is a little outside the average investor’s range, so I didn’t include it.
Although you can only invest through an adviser, consider adding Dimensional Fund Advisers US Large Company Portfolio which mimics the S&P 500 and has a 0.15% expense ratio
Can you describe to your readers how you got the information you presented?
I’ve been using Morningstar, but it’s interface only seems to allow one stock to be pulled up at a time.
What about taxes? Morningstar shows: pre-tax return, tax adjusted return and tax cost ratio. Aren’t those important as well?
SPY has an expense ratio of 0.09% and is the most liquid stock in the world (measured by average daily dollar volume)
It is an ETF, not a fund, but worth considering.
Expensive though at a 100plus a share not many can afford to accumulate on a monthly basis plus commisions. Where as with the mutual fund the price is much lower and you buy fractons of shares plus a lot of online brokerages offer no transaction fees on the above mentioned index funds.
I always recomend VTI as about the cheapest ETF you can find. .07%. It doesn’t just try to match the S&P (althogh ti does that well). It also includes companies on other American exchanges.
Its better than the S&P its the total stock market. Its like buying the 30 Dow Titans and and the S&P’s 500 companies plus the techonology weighted NASDAQ. It tends to outperform over the very long term any of the major indices
I’ve been using the Dreyfuss S&P 500 Index Fund (DSPIX) for years, and they have a 0.20% expense ratio.
Expense ratios are important in the final performance of any fund, but so are taxes. These are reflected in the tax-adjusted return figure. Over the last ten years, the Vanguard 500 fund (VFINX) posted a tax-adjusted return of -0.61%, the Fidelity 500 fund (FSMKX) posted -0.82%, and the Schwab 500 fund (SWPPX) posted -0.80%. The 10-year tax-cost ratio of the Vanguard fund is 0.38%, the Fidelity fund 0.58%, and the Schwab fund 0.59%. When comparing the historical performance of funds, always use the tax-adjusted return figure 9which also factors in trading costs).
The tax-adjusted return and tax cost ratio figures for these funds can be found on Morningstar by plugging the fund symbol into the quote box and clicking the “Tax” tab.
Vanguard pioneered the index concept, developd it, and stuck with it for decades before it became the strategy of choice for many. For index mutual funds, they are the best!
And no, I don’t work for Vanguard!
good point on the after tax return. All these index funds have negative returns for 10 years makes it harder to hold on to the thesis of buying index funds for the long run.
The returns you posted are total returns correct?
The figures for VFINX, FSMKX and SWPPX are from Morningstar as of 10/02.
I assume the only way to purchase these funds is to sign up with the actual company right?
So if I want to invest in Schwab S&P 500 I have to open an account at Schwab?
You can purchase funds without signing up with the company but you would usually have to pay a transaction fee, so the cheapest way is to go with the actual company.
Try the SVSPX in Ameritrade No Load or Transaction Fees! If you put it in a Roth or Traditional your minimum investment is only 250!
Thanks for the tip Juan! I just checked it out.
Keep in mind that the key to successful investing is using more than one index. As you expand into small stock index funds, small value, international, etc., fees will vary. I do feel that DFA provides the the best variety of asset class funds that allow for thorough diversification.