Kip ETF 20: The Best Cheap ETFs You Can Buy

Build a solid core for your portfolio and explore new opportunities with our favorite cheap ETFs.

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The U.S. stock market is just over 233 years old, but it's still learning new tricks. That much is evident in the ever-evolving world of exchange-traded funds (ETFs), which invest in pooled baskets of securities but trade like individual stocks.

A wave of innovative exchange-traded products, from a bumper crop of new actively managed ETFs to funds that can track the price of bitcoin to a growing multitude of options-based strategies, has helped drive record asset inflows into exchange-traded funds.

U.S. ETFs pulled in $1.1 trillion in net inflows in 2024, exceeding the previous high of $901 billion in 2021. The number of ETFs, according to the Investment Company Institute, swelled in 2024 to 3,637 from 3,119 the previous year, a 17% jump.

Through June 30 of 2025, asset inflows are on track to be even larger. "Even in times of market volatility and uncertainty, investors are turning more to ETFs to deploy cash as opposed to sitting on the sidelines," says Cinthia Murphy, an investment strategist at TMX VettaFi.

Interestingly, many investors are choosing broad-based index funds. Last year, for instance, the Vanguard S&P 500 ETF (VOO) took in a record inflow of $115 billion; this year, the fund already has $66 billion in fresh net assets through the end of June.

"That's an insane amount of money," says Murphy. "This isn't tactical trading. It's long-term, buy-and-hold investing."

Make no mistake, however: Esoteric ETFs are getting a lot of attention, too. The success of crypto-based ETFs, measured by asset inflows, is "staggering," says Aniket Ullal, head of ETF research and analytics at CFRA Research.

An iShares fund that tracks the spot, or current, price of bitcoin (as opposed to the many cryptocurrency ETFs based on futures contracts) pulled in $6 billion in May alone, says Ullal.

Single-stock ETFs that use leverage to goose returns (but can also amplify losses) have been popular as well among sophisticated active traders. And a lot of money is flowing into covered-call funds, which invest in stocks and sell call options on those securities to generate additional income.

More ETFs are coming

The ranks of exchange-traded funds are about to expand in the months ahead, thanks to the expected approval of a raft of applications with the Securities and Exchange Commission.

Dozens of investment firms, including BlackRock, Fidelity and Vanguard, have applied for an ETF share-class exemption, which will allow them to add an ETF share class to their existing mutual funds (or a mutual fund share class to their existing ETFs).

"This is a transformative development in the fund industry, and everyone is preparing for it," says Aisha Hunt, a founder of Kelley Hunt, a boutique law firm that specializes in ETF initiatives.

Most industry watchers expect the SEC to approve the exemptive-relief applications in the third quarter of 2025, but it could happen even sooner, says Hunt. And new ETF launches of existing mutual fund strategies could happen "more quickly than people realize," she adds.

The upside of this exemption is that regular investors may get access to a number of good actively managed mutual fund strategies that they couldn't invest in before without paying a hefty load, say, or buying through an adviser. And if ETFs issue mutual fund share classes, it could mean that more innovative funds may one day be offered in 401(k) plans.

Don't assume all mutual funds will launch an ETF share class, however. Because of the way ETFs are structured, market makers must be able to recreate or imitate a given strategy with a basket of securities. If that can't be done effectively, a mutual fund portfolio manager and its board may decide not to issue an ETF share class of the strategy, says Hunt.

What is certain: SEC approval of the ETF share-class exemption will bring a bonanza of new ETF launches. "Choice is always great, but it can also be overwhelming," says Murphy. "More products will make it more difficult to choose. Due diligence is going to get harder."

How we chose the best cheap ETFs to buy

That's where the Kiplinger ETF 20 can help. We have shepherded this list of our favorite exchange-traded funds for 10 years. Over the past 12 months, a volatile time for unsettled markets, our picks held up well.

As always, our picks cover all the basic asset groups, as well as funds that can add a little spice to your portfolio.

But the 20 ETFs are not meant to represent a complete portfolio. Instead, decide on the types of market exposure you need, and choose funds among the ETF 20 to build a portfolio that's right for you.

Read on for more analysis of the best cheap ETFs to buy. These Kip ETF 20 picks allow investors to tackle various strategies at a low cost. All returns and data are as of June 30, unless otherwise noted.

Nellie S. Huang
Senior Editor, Kiplinger Personal Finance Magazine

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.