7 Affordable ETFs for Your Portfolio in 2025

Discover Low-Cost Funds That Can Diversify and Grow Your Holdings

Fact checked by Kirsten Rohrs Schmitt
Reviewed by Julius Mansa

Small differences in investment costs can lead to dramatically different outcomes over time. For example, a $10,000 investment growing at 7% annually in a fund charging 0.03% in fees would be worth 36% less after 30 years than the same investment charging 1.5%. This stark difference highlights why cost-conscious investors often turn to low-cost exchange-traded funds (ETFs).

The rise of ultra-low-cost ETFs has greatly changed investing. Today, investors can build globally diversified portfolios spanning stocks, bonds, and other assets for annual costs of less than $30 per $100,000 invested—less than half what similar portfolios cost a generation ago.

Below, we’ve compiled a list of eight low-cost ETFs that can provide you with the building blocks for a well-diversified portfolio across major asset classes in 2025. Our choices range from funds holding broad U.S. and international stocks to those with bonds, dividend payers, and sustainable investments. Each fund charges rock-bottom fees while offering diverse exposure to its target market.

Key Takeaways

• Ultra-low-cost exchange-traded funds (ETFs) can save investors tens of thousands of dollars in fees over long holding periods compared with higher-cost actively managed funds.
• Broad market ETFs tracking major indexes offer instant diversification across hundreds or thousands of securities for annual costs as low as 0.03%.
• A well-diversified portfolio can be built using just two to four low-cost ETFs spanning U.S. stocks, international stocks, and bonds.
• When comparing similar ETFs, look beyond just expense ratios to trading volume, tracking error, and tax efficiency.
• Environmental, social, and governance (ESG) and dividend-focused ETFs typically charge slightly higher fees than broad market funds but still offer relatively cost-effective exposure to these strategies.

What You Need To Know About Low-Cost ETFs Before Investing

ETFs with rock-bottom fees have transformed how everyday investors build wealth. While a “low-cost” ETF typically refers to any fund with an expense ratio under 0.20%, many of today’s largest ETFs charge just 0.03%—meaning you’ll pay just $3 annually in fees per $10,000 invested.

These ultralow fees are possible because most low-cost ETFs take a “passive” approach, simply tracking established market indexes rather than trying to beat them. By eliminating the need for teams of analysts and frequent trading, passive ETFs can keep costs minimal while providing broad market exposure.

The expense ratio represents the annual cost of operating the fund, expressed as a percentage of assets. Beyond fees, investors should also consider an ETF’s trading volume (which affects how easily you can buy and sell), tracking error (how closely it follows its target index), and tax efficiency. Higher trading volume generally means tighter bid-ask spreads, making the ETF cheaper to trade.

Core US Market Coverage

1. Vanguard Total Stock Market ETF (VTI)

Buying shares in VTI is essentially a way to purchase small slices of virtually every publicly traded U.S. company. This ETF tracks the CRSP U.S. Total Market Index, providing exposure to more than 4,000 stocks across large, midsize, and small companies.

VTI offers excellent liquidity—meaning investors can easily buy and sell large amounts without moving the price. The fund’s broad diversification helps reduce risk compared with holding individual stocks or narrowly focused ETFs. Historically, VTI has demonstrated strong performance in line with the overall U.S. market, making it a reliable long-term investment option for those looking to grow wealth steadily. Its broad exposure also reduces the risk of overconcentration in any single company or sector, a feature especially valuable when there’s market volatility.

Top holdings include familiar names like Apple Inc. (AAPL), Microsoft Corporation (MSFT), and Amazon.com Inc. (AMZN), but VTI also provides exposure to smaller, growing companies that could become tomorrow’s leaders.

For beginning investors, VTI can serve as a core portfolio holding, offering a low-cost way to participate in the potential for the long-term growth of the entire U.S. stock market.

Who Should Invest in VTI?

VTI is worthwhile for investors who fit the following:

• Want a simple, all-in-one product for U.S. equity exposure.
• Are building a diversified portfolio and need a core holding.
• Want low-cost investments with long-term growth potential.

$3.3 trillion

The largest ETF provider is BlackRock, which has $3.3 trillion in assets under management as of late 2024.

2. Schwab U.S. Broad Market ETF (SCHB)

The Schwab U.S. Broad Market ETF is another “one-stop shop” for U.S. stock market exposure while also having one of the lowest costs in the industry. By tracking the Dow Jones U.S. Broad Stock Market Index, SCHB provides exposure to about 2,500 of America’s largest publicly traded companies.

While it’s similar to VTI, SCHB covers fewer companies, focusing on larger and more established businesses. With its 0.03% expense ratio (matching VTI’s costs), investors pay just 30 cents annually per $1,000 invested. The fund’s normal trading volume should ensure adequate liquidity for most individual investors, though not quite at VTI’s scale.

SCHB particularly appeals to Schwab customers, who can trade it commission-free on Schwab’s platform. Top holdings include familiar names like Apple, Microsoft, and Alphabet Inc. (GOOG, Google’s parent company).

One key advantage: SCHB’s slightly more focused approach might appeal to investors who want broad market exposure but prefer emphasizing larger, more established companies. This can mean slightly less volatility compared with funds that include smaller, more speculative stocks.

Who Should Invest in SCHB?

SCHB is worthwhile for investors who fit the following:

• Investors looking for a broad, low-cost way to participate in the U.S. equities market.
• Individuals building a diversified portfolio with a strong core component.
• Those seeking long-term growth with minimal management fees.

Bond Market Holdings

3. Vanguard Total Bond Market ETF (BND)

While stocks often grab headlines for their potential for growth, bonds play a crucial role in portfolios by providing steady income and helping smooth out stock market volatility. BND tracks the Bloomberg U.S. Aggregate Bond Index, which represents the entire U.S. investment-grade bond market. The fund holds over 11,000 bonds, including government securities, corporate bonds, and mortgage-backed securities.

With an expense ratio of just 0.03%, BND also has heavy trading volume. BND can serve as the foundation of your bond allocation, offering broad diversification and professional management at a fraction of what actively managed bond funds charge. BND has consistently mirrored the performance of the overall bond market, making it a reliable choice for income-focused investors. Its wide diversification reduces exposure to individual issuer risk while providing consistent yields.

One important note: When interest rates rise, bond prices typically fall, and BND isn’t immune to this. However, its broad diversification helps minimize the impact of any single bond defaulting or underperforming.

Who Should Invest in BND?

BND is worthwhile for the following:

• Conservative investors seeking steady income and capital preservation.
• Individuals looking to balance equity exposure with lower-risk investments.
• Those building a diversified, long-term portfolio focused on stability.

Note

In 2024, the assets for ETFs in the U.S. grew to over $9 trillion. Mutual funds, meanwhile, stood at over $21 trillion in assets under management.

Low-Cost ETFs for International Diversification

4. iShares Core MSCI Total International Stock ETF (IXUS)

Just like how sports teams try not rely on one star player to win championships, prudent investors don’t stake their financial future on a single market’s performance, even one that’s been as robust (in general) over the long term as the U.S.

IXUS tracks the MSCI ACWI ex USA IMI Index, which covers large, medium, and small companies across more than 40 countries—from established markets like Japan and Germany to growing economies like India and Brazil. As an “ex-U.S.” ETF, however, it avoids investing in the U.S. since most investors already have holdings there—this fund is for those looking to diversify abroad.

With an expense ratio of 0.07%, investors pay 70 cents annually per $1,000 invested—comparatively cheap, given that you don’t need to worry about currency exchanges and research abroad to access thousands of international stocks. The fund’s large size and healthy trading volume ensure investors can easily buy and sell shares when the need arises.

Financial advisors often recommend holding 20% or so of a stock portfolio in international shares for proper diversification. IXUS can serve this role efficiently, though investors should note that international investing comes with additional risks, including currency fluctuations and geopolitical hazards.

The fund’s broad geographic diversity helps protect against country-specific risks—if one market struggles, others might pick up the slack. Japan, the United Kingdom, and Canada typically represent the largest allocations for the fund by country, though percentages fluctuate with market changes.

Who Should Invest in IXUS?

IXUS is worthwhile for those who fit the following:

• Investors seeking to diversify their holdings beyond U.S. markets.
• Individuals looking for exposure to both developed and emerging international economies.
• Long-term investors aiming to balance global risks and opportunities.

5. Vanguard FTSE Developed Markets ETF (VEA)

For investors looking to add international flavor to their portfolio without venturing into emerging markets, VEA offers a cost-effective way to invest in established economies like Japan, the United Kingdom, and Canada. The fund tracks the FTSE Developed All Cap ex US Index, providing exposure to about 4,000 large- and midsized companies across more than 20 countries.

With a low expense ratio of 0.05%, this ETF is an affordable way to diversify globally while focusing on stable, established economies. VEA’s developed-market focus means it typically experiences less volatility than funds that including emerging markets. However, investors should still understand that international investing carries unique risks, including currency fluctuations and different accounting standards.

Top holdings include household names like Nestle SA (NSRGY), ASML Holding NV (ASML), and Novo Nordisk (NVO).

Many investors use VEA alongside a small allocation to emerging markets ETFs, allowing them to fine-tune their international exposure. This approach lets investors adjust their exposure to emerging markets based on their risk tolerance and market outlook.

Who Should Invest in VEA?

VEA is well-suited for the following:

• Investors looking to diversify outside the U.S. by focusing on developed markets.
• Those seeking stable, long-term international exposure with moderate risk.
• Portfolio builders who want a low-cost international equity option to balance their holdings.

Many long-term retail investors use dollar-cost averaging, a strategy where you periodically put away a set amount into an ETF or mutual fund, no matter how the market behaves. In the long run, you can then gain from buying more when prices are down and gain from price appreciation.

Coverage for Dividend Income

6. iShares Select Dividend ETF (DVY)

While many investors focus on stock price appreciation, dividend-paying stocks offer regular payments. DVY targets companies that have done this consistently, focusing on about 100 U.S. stocks with strong dividend track records.

The fund tracks the Dow Jones U.S. Select Dividend Index, which screens stocks based on dividend growth, payout ratio, and trading volume to identify reliable dividend payers. Thus, it holds established companies that prioritize returning cash to shareholders over rapid growth.

With an expense ratio of 0.38%—you’ll pay $38 annually per $10,000 invested—DVY is pricier than broad market ETFs but still reasonable for its specialized focus on income generation. The fund’s assets and healthy trading volume ensure good liquidity.

Unlike growth-focused ETFs, DVY tends to be heavily weighted toward sectors known for stable cash flows and regular dividends. These include stalwarts like the utility companies Duke Energy Corporation (DUK) and NextEra Energy, Inc. (NEE); consumer staples firms like Procter & Gamble Company (PG); financial giants like Prudential Financial, Inc. (PRU); and the manufacturer Caterpillar Inc. (CAT).

This sector concentration means DVY often behaves differently from the broader market, potentially providing additional benefits in terms of diversification beyond its steady dividends.

For retirees or others seeking regular income from their investments, DVY can serve as a core holding. However, investors should note that dividend-paying stocks aren’t immune to market declines, and companies can cut dividends during tough times, as many did during recent market crises.

Who Should Invest in DVY?

DVY is worthwhile for the following:

• Investors seeking steady, reliable income through dividends.
• Retirees or those focused on generating cash flow to cover expenses.
• Individuals looking to balance equity growth with predictable returns.

ESG Investing

7. iShares ESG Aware MSCI USA ETF (ESGU)

Want to invest in companies that prioritize environmental stewardship, social responsibility, and good governance—without paying a premium? ESGU offers exposure to U.S. companies with strong environmental, social, and governance (ESG) practices. Tracking the MSCI USA Extended ESG Focus Index, ESGU incorporates ESG metrics into its selection process while maintaining broad market exposure.

With an expense ratio of 0.15%, ESGU is higher than basic index funds, though it’s notably cheaper than most ESG-focused investments. The fund’s substantial size and active trading provide good liquidity for most investors.

The MSCI USA Extended ESG Focus Index starts with the broad U.S. stock market and adjusts companies’ weights based on ESG scores. Companies involved in weapons, tobacco, or severe ESG controversies are excluded entirely. Top holdings still include familiar names like Apple, Johnson & Johnson (JNJ), Microsoft, and Pfizer Inc. (PFE), but their weights reflect both market value and ESG performance.

For investors wanting to incorporate sustainability concerns into their portfolio without straying too far from market returns, ESGU can serve as a core U.S. stock holding. Its returns have historically tracked closely with the broader market while maintaining higher ESG standards.

Who Should Invest in ESGU?

ESGU is a good fit for the following:

• Investors seeking to align their portfolios with ESG principles.
• Those looking for broad U.S. equity exposure with a focus on sustainability.
• Long-term investors who want to integrate ethical considerations into their investment decisions.

ETFs

• Trade like stocks

• More flexible for active trading

• Lower expense ratios

• More tax efficient

Mutual Funds

• Price is adjusted once a day

• More suitable for longer term buy and hold strategies

• Less tax efficient

As a Beginner, What Type of ETF Should I Start With?

For most new investors, a broad U.S. market ETF like Vanguard’s Total Stock Market ETF (VTI) or Schwab’s U.S. Broad Market ETF (SCHB) makes an excellent first investment. These funds offer instant diversification across thousands of U.S. companies at a low cost. They’re highly liquid, and you’re essentially buying a tiny slice of the entire U.S. stock market.

Once you’re comfortable with how ETFs work and have built up your core U.S. market position, you can gradually add international ETFs and bond ETFs to further diversify your portfolio.

How Do ETF Dividends Work Compared With Stock Dividends?

Unlike individual stocks that typically pay dividends quarterly, ETF dividends vary by fund. Most distribute dividends monthly or quarterly, automatically reinvesting them unless you opt for cash payments. The key difference is that ETF dividends often combine income from multiple sources, including dividends from hundreds of stocks, interest from bonds, or revenue from lending out their securities rather than a company’s profits.

How Are International ETFs Affected by Currency Movements?

When you invest in international ETFs, you’re exposed to both stock market performance and currency fluctuations. If foreign currencies strengthen against the dollar, your returns get a boost. Conversely, if the dollar strengthens, your returns can be reduced, even if the underlying stocks perform well. Some international ETFs offer currency hedging to minimize these effects, though this usually increases costs.

The Bottom Line

Low-cost ETFs offer efficient, diversified market exposure at minimal expense. While the funds highlighted here represent some of the most cost-effective options available, investors should look beyond just expenses to consider trading volume, tracking accuracy, and fit with their investment goals and risk tolerance.

For most long-term investors, combining a few broad-market ETFs—perhaps a U.S. stock fund, an international fund, and a bond fund—can provide a well-diversified portfolio at a fraction of what similar investments cost a generation ago. Remember that the lowest-cost fund isn’t always the best choice—what matters most is finding ETFs that match your needs while keeping overall costs reasonable.