Best Index Funds for a Low-Priced Portfolio

Index funds are popular thanks to their low fees and wider diversity of stock selections. Here are nine that stand out.

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The world of exchange-traded funds (ETFs) has been growing in popularity over the past few decades. While there are a seemingly endless number of ETFs for investors to choose from, index funds have emerged as some of the most sought-after thanks in part to their lower fees and wider diversity of stock selection.

Index funds seek to track the return of a broader benchmark like the Dow Jones Industrial Average or a subset of the market such as small-cap growth stocks or healthcare.

Among the most popular is the SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500 Index and currently has around $400 billion in assets under management.

Why should you invest in index funds?

One reason, writes Kiplinger contributor Coryanne Hicks, is for their low cost. "Index funds can pull off these rock-bottom fees because they're passively managed, meaning the fund manager doesn't need to do any active research to choose investments for the fund," Hicks writes in her article on why you should invest in index funds. "All she does is copy what the benchmark index does. This enables companies to keep operating expenses low, which translates into lower fees for investors."

Another reason comes from Dan Burrows, senior investing writer at "It's almost impossible to beat the market for any sort of sustained period of time," Burrows writes in his column on why he chooses to invest in index funds over stocks. "You might get lucky for a year or two; maybe three even. But you are probably not the next Warren Buffett. I know for certain that I'm not."

Echoing this,  Princeton finance professor Burton Malkiel told CNBC in a January email interview that "Standard & Poor's publishes annual reports showing how actively managed funds compare with index funds. Each year about two-thirds of active managers underperform an index fund." 

Malkiel is best known for his investment classic, A Random Walk Down Wall Street. In early January, Malkiel released an updated 50th-anniversary edition of his book, which is considered one of the most influential pieces of writing on index funds. 

What's more, index funds offer diversification. "They can include hundreds or even thousands of stocks or bonds across a range of sectors and sizes," Hicks writes. "Diversification reduces the risk of any one stock derailing your portfolio's performance."

Here are 9 of the best index funds to buy for various financial goals.  This is a wide selection of the best ETFs and mutual funds that investors can choose from, including those with exposure to large-cap stocks, technology and international firms.


Data is as of May 31. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds. 

Will Ashworth
Contributing Writer,

Will has written professionally for investment and finance publications in both the U.S. and Canada since 2004. A native of Toronto, Canada, his sole objective is to help people become better and more informed investors. Fascinated by how companies make money, he's a keen student of business history. Married and now living in Halifax, Nova Scotia, he's also got an interest in equity and debt crowdfunding.