ETFs are surpassing mutual funds as the standard building blocks of stock and bond portfolios. Therefore, I’m taking a closer look at the latest commission-free ETF lists from the major brokers. Unfortunately, the marketing often focuses on quantity instead of quality. Who cares if they offer 500+ ETFs, if I only need six good ones? Here are the factors that I think are important:
- Total Assets. This is a measure of popularity and reputation. A more popular ETF will have a smaller bid/ask spread and won’t have to liquidate in a bear market. A more reputably ETF manager will have lower index tracking error. However, ETF size isn’t everything.
- Index/Asset Class. What index does it track? Does that index cover an asset class that I want to include?
- Cost. What is the expense ratio? Low costs are important.
Fidelity Commission-Free ETF full list. The main Fidelity ETF page currently advertises 357 commission-free ETFs (28 from Fidelity and 329 from iShares). The full list requires a log-in. Here is an outdated PDF which lists the 240 iShares ETFs (89 more have since been added). There are several good, low-cost options from the iShares Core Series of ETFs.
Recent changes. In early February 2019, Fidelity announced that it would match Schwab and increase the number of commission-free ETFs on their list to “more than 500” by the end of the month. However, in late February 2019 they announced that they added a few new Fidelity ETFs and 89 additional iShares ETFs (formerly 240) as part of a “first phase”.
In February 2017, Fidelity lowered the standard commission on online stock and ETF trades to $4.95 per trade, down from $7.95 previously. In August 2018, Fidelity announced a part of zero-expense ratio mutual funds, eliminated many account minimums, and cut a bunch of mutual fund expense ratios by getting rid of share classes.
Largest ETFs on Fidelity Commission-Free ETF list. Here are the top 20 most popular ETFs on their list, sorted by largest total assets. I have added in the asset class (index) and expense ratio.
ETF Name (Ticker) | Asset Class | Expense Ratio |
iShares Core S&P 500 ETF (IVV) | US Large Cap Blend | 0.04% |
iShares MSCI EAFE ETF (EFA) | International Large Cap Blend | 0.31% |
iShares Core MSCI EAFE ETF (IEFA) | International Large Cap Blend | 0.08% |
iShares Core U.S. Aggregate Bond ETF (AGG) | US Total Bond | 0.05% |
iShares Core MSCI Emerging Markets ETF (IEMG) | Emerging Markets Stock | 0.14% |
iShares Core S&P Mid-Cap ETF (IJH) | US Mid Cap Blend | 0.07% |
iShares Russell 2000 ETF (IWM) | US Small Cap Blend | 0.19% |
iShares Core S&P Small-Cap ETF (IJR) | US Mid Cap Blend | 0.07% |
iShares Russell 1000 Growth ETF (IWF) | US Large Cap Growth | 0.20% |
iShares Russell 1000 Value ETF (IWD) | US Large Cap Value | 0.20% |
iShares MSCI Emerging Markets ETF (EEM) | Emerging Markets Stock | 0.67% |
iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) | US Corporate Bonds | 0.15% |
iShares Edge MSCI Min Vol USA ETF (USMV) | US Low Volatility | 0.15% |
iShares S&P 500 Growth ETF (IVW) | US Large Cap Growth | 0.18% |
iShares TIPS Bond ETF (TIP) | US Inflation-Protected Bond | 0.19% |
iShares 1-3 Year Treasury Bond ETF (SHY) | Short-Term Treasury Bond | 0.15% |
iShares Short Treasury Bond ETF (SHV) | Short-Term Treasury Bond | 0.15% |
iShares Russell 1000 ETF (IWB) | US Large Cap Blend | 0.15% |
iShares Core S&P Total U.S. Stock Market ETF (ITOT) | US Total Stock | 0.03% |
iShares Russell Midcap ETF (IWR) | US Total Stock | 0.20% |
Lowest Expense Ratio ETFs on Fidelity Commission-Free ETF list. Here are the top 20 cheapest ETFs on their list, sorted by lowest expense ratio.
ETF Name (Ticker) | Asset Class | Expense Ratio |
iShares Core S&P Total U.S. Stock Market ETF (ITOT) | US Total Stock | 0.03% |
iShares Core S&P 500 ETF (IVV) | US Large Cap Blend | 0.04% |
iShares Core S&P U.S. Value ETF (IUSV) | US Large Cap Value | 0.04% |
iShares Core S&P U.S. Growth ETF (IUSG) | US Large Cap Growth | 0.04% |
iShares Core U.S. Aggregate Bond ETF (AGG) | US Total Bond | 0.05% |
iShares Core MSCI International Developed Markets ETF (IDEV) | International Developed Large Cap Blend | 0.07% |
iShares Short-Term Corporate Bond ETF (IGSB) | US Short-Term Corporate Bond | 0.06% |
iShares Intermediate-Term Corporate Bond ETF (IGIB) | US Interm-Term Corporate Bond | 0.06% |
iShares Broad USD Investment Grade Corporate Bond ETF (USIG) | US Total Corporate Bond | 0.06% |
iShares 0-5 Year TIPS Bond ETF (STIP) | US Inflation-Protected Bond | 0.06% |
iShares Core 1-5 Year USD Bond ETF (ISTB) | US Short-Term Bond | 0.06% |
iShares 0-5 Year Investment Grade Corporate Bond ETF (SLQD) | US Short-Term Corporate Bond | 0.06% |
iShares Core Total USD Bond Market ETF (IUSB) | US Total Bond | 0.06% |
iShares Core S&P Mid-Cap ETF (IJH) | US Mid Cap Blend | 0.07% |
iShares Core S&P Small-Cap ETF (IJR) | US Mid Cap Blend | 0.07% |
iShares National AMT-Free Muni Bond ETF (MUB) | Municipal Bond | 0.07% |
iShares S&P Short Term National AMT-Free Bond ETF (SUB) | Short-Term Municipal Bond | 0.07% |
iShares Core U.S. REIT ETF (USRT) | US Real Estate | 0.08% |
iShares Core High Dividend ETF (HDV) | US High Dividend Stock | 0.08% |
iShares Core MSCI EAFE ETF (IEAFA) | International Developed Large Stock | 0.08% |
Commentary. Fidelity’s list includes a good mix of iShares Core ETFs with good management, low costs, and low bid/ask spreads. An individual investor can easily create a diversified portfolio of ETFs according to their desired asset allocation. However, in their latest round of additions, they added a bunch of older iShares ETFs which were mostly more popular for professional traders and options buyers, not for long-term investors. For example, why would you buy EEM when you could buy IEMG with a much lower expense ratio? DIY investors need to choose carefully.