Kip ETF 20: The Best Cheap ETFs You Can Buy

iShares Core S&P 500 ETF

• Kip ETF classification: Core stock fund
• Dividend yield: 1.1%
• Expense ratio: 0.03%

The iShares Core S&P 500 (IVV) fund may be the prime example of ETF investing at its basic and best: It tracks a broad stock index and charges a super-low, 0.03% expense ratio.

As its name implies, iShares Core S&P 500 aims to replicate the S&P 500 by holding shares in the bogey's constituents.

Fun fact: Because some member firms have more than one share class, including Alphabet (GOOG, GOOGL) and Fox (FOX, FOXA), the S&P 500 index actually tracks 503 stocks.

Another fun fact: Over the past 10 years, this ETF has not paid out any capital gains distributions. (That's true for the next two funds, too.)

iShares Core S&P Mid-Cap ETF

• Kip ETF classification: Core stock fund
• Dividend yield: 1.2%
• Expense ratio: 0.05%

The ETF world has many excellent small- and midsize-company index funds, but we purposely pair these ETFs with the Core S&P 500 ETF because there's no overlap in fund holdings. You won't find any of the Core S&P 500 stocks in the iShares Core S&P Mid-Cap ETF (IJH) or the iShares Core S&P Small-Cap ETF (IJR), detailed below, nor any duplications between the smaller-cap funds. That makes it easier to manage your portfolio's exposure to stocks of different-size companies.

Another plus: Companies must pass a profitability measure to be included in any S&P stock index — positive earnings over the most recent quarter, as well as positive earnings over the previous four quarters added together.

The Mid-Cap ETF tracks the S&P MidCap 400 Index, which includes 400 midsize firms with market values between $1.3 billion and $22 billion.

These companies have successfully navigated the challenges small companies face but are still growing and remain nimbler than large businesses.

iShares Core S&P Small-Cap ETF

• Kip ETF classification: Core stock fund
• Dividend yield: 1.1%
• Expense ratio: 0.06%

The iShares Core S&P Small-Cap ETF (IJR) tracks the S&P SmallCap 600, which includes 602 stocks in burgeoning firms as small as $185 million and as big as $8.2 billion.

Stocks in smaller companies have been rallying lately. Both Core S&P Mid-Cap and Core S&P Small-Cap have outpaced their large-company sibling over the past six months. Will the rally persist? Wall Street strategists are divided on that. Some expect the momentum to continue; others are more cautious.

No matter. Diversification is not something you turn on and off depending on market conditions. Maintaining exposure to small- and mid-cap stocks at all times is always a good investing move.

NEW→ Vanguard Total Stock Market ETF

• Kip ETF classification: Core stock fund
• Dividend yield: 1.1%
• Expense ratio: 0.03%

Uncertain about how much of your portfolio to devote to large-, small- and midsize-company stocks? Go for the Vanguard Total Stock Market ETF (VTI), which holds nearly 3,500 stocks, weighted by market value.

Large-company issues make up almost 72% of assets; shares in midsize firms, 19%; and shares in small firms, nearly 9%. In short, this ETF is good for investors who want set-it-and-forget-it exposure to all U.S. stocks.

The fund offers other pluses. There's no FOMO here: The all-encompassing fund has kept pace with the S&P 500 in years past. Total Stock Market's 10-year 15.0% annualized gain falls within spitting distance of the S&P 500, which has returned 15.5%. And the ETF can beat the S&P 500 when small stocks perform well. In 2020, small- and midsize-company stocks rallied in the fourth quarter, and Total Stock Market returned 20.9% for the calendar year; the S&P 500 lagged behind with an 18.4% gain.

Finally, the ETF has outpaced 79% of all diversified U.S. stock mutual funds and ETFs over the past 20 years. "A simple index fund puts you ahead of roughly four out of five investors over time," says The Independent Vanguard Adviser's DeMaso.

Vanguard Total International Stock ETF

• Kip ETF classification: Core stock fund
• Dividend yield: 2.6%
• Expense ratio: 0.05%

Investing overseas is finally paying off. Since late 2024, foreign shares have outpaced U.S. stocks. The Vanguard Total International Stock ETF (VXUS) invests in roughly 40 different developed and emerging markets — from Germany and Korea to Australia and Chile — and excludes U.S. stocks.

Emerging-markets shares make up 26% of the fund's portfolio; shares in Europe, 37%; and Pacific shares, 28%.

Over the past 12 months, many overseas markets posted solid returns, and the fund gained 27.3%. If you're jumping on this bandwagon for the first time, or you want a simple, no-fuss way to invest in foreign stocks, this ETF requires no overthinking.

Capital Group Dividend Value ETF

• Kip ETF classification: Dividend stock fund
• Dividend yield: 1.2%
• Expense ratio: 0.33%

The actively managed Capital Group Dividend Value (CGDV) stock fund is on fire. It aims to generate above-market-average dividend yield by investing in high-quality dividend-paying stocks. The fund currently yields 1.3%; the S&P 500, 1.1%.

Each of the ETF's five managers and a group of analysts independently run a piece of the fund's assets, a hallmark of the way Capital Group, the parent company of the American Funds brand of mutual funds, runs portfolios. Some fund managers may hold 19 to 25 stocks, others 40 to 47, says co-manager Chris Buchbinder.

Having multiple managers with differentiated approaches, the thinking goes, enhances diversification. During the early-2025 tariff-related market sell-off, the managers snapped up discounted tech shares, including Nvidia (NVDA) and Applied Materials (AMAT). The rebound in those stocks has contributed significantly to the fund's 26.4% return over the past 12 months.

NEW→ iShares Core Dividend ETF

• Kip ETF classification: Dividend stock fund
• Dividend yield: 2.3%
• Expense ratio: 0.05%

It's back to basics with the iShares Core Dividend ETF (DIVB). The fund tracks an index that targets U.S. companies that pay dividends, repurchase shares or both. The largest dividend payouts and buyback programs in the market by dollar value make the cut.

The result is a portfolio of 405 mostly large-cap stocks that doesn't resemble the S&P 500. Cisco Systems (CSCO), Qualcomm (QCOM) and Exxon Mobil (XOM) topped the portfolio at last report. Over the past three years, the ETF's annualized return, 20.5%, ranks among the top 10% of its peer group (funds that focus on large-company stocks trading at bargain prices) and keeps pace with the S&P 500.

The portfolio skews more toward growth sectors than peer ETFs do — tech stocks make up 33% of the portfolio, nearly double the percentage in the typical large-value fund. But a good chunk of Core Dividend's assets is in sectors that tilt toward value, too, such as energy and financials.

In sum, the fund is a good portfolio diversifier. Its 2.3% dividend yield is a draw, too.

iShares International Dividend Growth ETF

• Kip ETF classification: Dividend stock fund
• Dividend yield: 2.8%
• Expense ratio: 0.15%

Dividend stocks generally offer a one-two punch of income and lower volatility. In that regard, the iShares International Dividend Growth ETF (IGRO) does not disappoint. Over the past five years, the index fund has kept pace with peers (foreign large-company funds that invest in a mix of growth stocks and value-priced shares), with significantly below-average volatility.

The fund tracks an index weighted by dividend dollars — the bigger the payout, the bigger a company's weight in the portfolio — that targets stocks with a record of uninterrupted annual dividend increases and the capacity to sustain that growth.

Over the past 12 months, the fund's 14.7% return lags its peer group. Foreign technology shares climbed 113% over the past year, driving returns in foreign-stock funds, and iShares International Dividend Growth is light on the sector relative to peers. Its biggest country exposures, Japan and Canada, each gained nearly 30% or better over the past year, which helped the fund's performance. But top-five holding Novo Nordisk (NVO) was a drag. Shares in the Danish drug firm declined 28% over the past 12 months as it struggled to maintain market share amid ongoing competition for weight-loss drugs.

We are keeping things in perspective: In five of the past nine full calendar years, iShares International Dividend Growth ETF has outpaced its peers. And over the past 10 years, though its 8.9% annualized return lags the 9.5% of its peers, it delivered that return with below-average volatility. The fund yields 2.6%.

State Street Health Care Select Sector SPDR

• Kip ETF classification: Strategic stock fund
• Dividend yield: 1.6%
• Expense ratio: 0.08%

Don't be distracted by the new "State Street" addition to this fund's name. The fund sponsor added its firm name to the State Street Health Care Select Sector SPDR ETF (XLV), and others, including some other Kip ETF 20 members, as part of a rebranding move in late 2025, but nothing else has changed. The fund still tracks the 60 health care stocks in the S&P 500 Index, weighted by market value.

The ETF had a decent year on an absolute-return basis, gaining 20% over the past 12 months. It's closing the gap in performance with the S&P 500, which climbed 22%.

The sector's industries are a motley crew, and performance varied. Pharmaceutical stocks, for example, posted a whopping 50% gain over the past year; health equipment and supplies companies sank 24%.

Health shares have rallied recently, but for a long stretch, they trailed the S&P 500. So what's the appeal? Sector fundamentals are strong, according to BlackRock Fundamental Equities, a BlackRock division that builds portfolios through rigorous bottom-up research.

Nearly 90% of health care companies in the S&P 500 exceeded earnings expectations in the four quarters of 2025, the second-best turnout among all sectors. And analysts anticipate an acceleration in health care earnings growth in 2026, driven by pharmaceuticals and managed care companies.

What's more, health care shares have historically traded at a premium price-earnings ratio to the broad market, but they now trade at a 15% discount.

Invesco S&P 500 Equal Weight ETF

• Kip ETF classification: Strategic stock fund
• Dividend yield: 1.5%
• Expense ratio: 0.20%

If you're worried about an overconcentration of a handful of tech-related companies in the S&P 500, consider the Invesco S&P 500 Equal Weight ETF (RSP) to balance your portfolio.

Unlike a traditional market-value-weighted S&P 500 index fund — the bigger the company, the bigger its slice of portfolio assets — this fund gives each company in the portfolio an equal portion of assets.

The result? Nvidia, Apple (AAPL) and Microsoft (MSFT), the biggest stocks in the traditional benchmark, don't rank among the top 10 holdings in the Invesco S&P 500 Equal Weight ETF. Instead, Corning (GLW) and Moderna (MRNA) top this fund's portfolio.

This fund won't keep pace with the traditional index when the largest companies are driving returns. Over the past three years, for instance, Invesco S&P 500 Equal Weight's 14.3% annualized return has lagged the 20.6% gain in the S&P 500. But when smaller companies in the index rally, this ETF can lead the broad-market bogey, as it did in 2021 and 2022.

iShares Core MSCI Emerging Markets ETF

• Kip ETF classification: Strategic stock fund
• Dividend yield: 2.2%
• Expense ratio: 0.09%

In the two years since we added the iShares Core MSCI Emerging Markets ETF (IEMG) to the Kip ETF 20, it has gained a cumulative 64%, thanks in part to a weakening of the dollar and surging global demand for artificial-intelligence semiconductors.

Stocks in Taiwan and Korea make up nearly half of the index, and those country markets have each logged triple-digit gains over the past 12 months. Tech stocks in those countries, including Taiwan Semiconductor Manufacturing (TSM) and SK Hynix (SKHY), led the way.

Will the run continue? Many strategists came into 2026 bullish about emerging markets stocks. There's still reason to be optimistic.

"As the world fragments and tech investment accelerates, strategic resources matter more," Morgan Stanley's Lisa Shalett says in a recent report. "Countries with leverage in energy, materials and critical supply chains can gain influence as trading partners and as essential links in global production. For investors, that can translate into a wider opportunity set."

JPMorgan U.S. Quality Factor ETF

• Kip ETF classification: Strategic stock fund
• Dividend yield: 1.1%
• Expense ratio: 0.12%

When the going gets tough, high-quality stocks tend to hold up better. That's a key reason we have the JPMorgan U.S. Quality Factor ETF (JQUA) on this roster. The fund holds stakes in high-quality U.S. companies with robust profit margins and little debt.

Over the past five years, the portfolio of 200-odd stocks has consistently held up better than the S&P 500 in rough markets, including most recently after the start of the Iran war.

Even better, this fund can keep up in good times, too. From the market bottom in late March through June, for instance, JPMorgan U.S. Quality Factor gained 18.3%, ahead of the 15.2% climb in the S&P 500 as it hit a new high.

The ETF's longer-haul records are just as impressive: The fund's five-year annualized return, 13.6%, ranks among the top 15% of large-company funds that invest in a mix of fast-growing stocks and value-priced shares.

SPDR S&P Kensho New Economies Composite ETF

• Kip ETF classification: Strategic stock fund
• Dividend yield: 1.5%
• Expense ratio: 0.20%

Of the 20 ETFs in the Kip ETF 20, the State Street SPDR S&P Kensho New Economies Composite ETF (KOMP) is the most aggressive, shoot-the-moon play.

The index-based fund uses AI and quantitative modeling to invest in companies that are disrupting traditional industries thanks to advancements in processing power, AI, robotics and automation.

Small-cap stocks make up 60% of the portfolio, midsize firms account for 22%, and large companies make up the rest. Top holding Ouster (OUST), a remote sensing technology company, has a $3 billion market value, small-cap territory.

But all that go-go innovation adds volatility. Buckle up if you buy shares in SPDR S&P Kensho New Economies, and size your stake appropriately so that it's in line with your investment time horizon and goals.

Technology Select Sector SPDR Fund

• Kip ETF classification: Strategic stock fund
• Dividend yield: 0.4%
• Expense ratio: 0.08%

A $10,000 investment in 2016 in the State Street Technology Select Sector SPDR ETF (XLK), which tracks the 72 tech stocks in the S&P 500, would be worth nearly $98,000 today. The same amount invested in an S&P 500 index fund would be $42,000.

It's a good bet that outperformance will continue. Analysts expect earnings growth in the sector to increase 18% over each of the next five years, on average, according to Morningstar. The earnings growth rate for the S&P 500 is forecast to be 12%.

The bigger the return, however, the greater the risk. Over the past five years, tech hasn't been the most volatile sector in the S&P 500 (that accolade goes to energy), but it's a close second.

Technology Select Sector SPDR is stacked with familiar heavyweights: Nvidia, Apple and Microsoft make up one-third of the portfolio. Invest in line with your tolerance for risk, your time horizon and with regard to the rest of your stock portfolio.

Fidelity Total Bond ETF

• Kip ETF classification: Core bond fund
• SEC yield: 4.9%
• Expense ratio: 0.36%

Over the past 12 months, this intermediate-term core-plus bond fund has had to navigate an up-and-down fixed-income market. Between July 2025 and February 2026, the broad bond market index, Bloomberg U.S. Aggregate Bond, was up 5%. But after the start of the Iran war, as interest rates inched upward, the index has slumped 1%. (Bond prices and interest rates move in opposite directions.)

At each market shift, the Fidelity Total Bond ETF (FBND) — notable for above-average returns with below-average volatility over the past decade — did better than the Agg, outpacing the index during the upturn and holding up better on the downside. Its one-year return, 4.1%, beats its peers, too. A big helping of short-term Treasuries, as well as asset-backed and commercial mortgage-backed securities, helped. The fund yields 4.9%.

But this fund will undergo a manager shift at the end of September. We will be watching closely as the transition plays out, but we have a substitute ready to go if necessary.

iShares Systematic Bond ETF

• Kip ETF classification: Core bond fund
• SEC yield: 4.9%
• Expense ratio: 0.25%

We added this intermediate-term core-plus ETF to the roster in May to replace a corporate-debt fund, Invesco BulletShares 2026 Corporate Bond ETF (BSCQ), that had hit its target maturity year.

There's a lot going on under the hood of the iShares Systematic Bond ETF (SYSB). For starters, high-yield debt (rated double-B to single-C) can be up to 25% of its assets. At last report, junk bonds were 20% of assets; investment-grade corporate debt (rated triple-A to triple-B), 30%; Treasuries, 32%; and government-guaranteed mortgage-backed securities, 16% (the rest is in cash).

Second, Systematic Bond is a little more dynamic than your typical index fund. Its approach is still rules-based and quantitative, but if interest rates are rising, the fund's portfolio will adjust so that its duration — its sensitivity to interest rates — falls relative to a broad universal bond index, and vice versa.

It's an index fund, but it has its own unique swim lane," says Steve Laipply, BlackRock's global co-head of iShares fixed-income ETFs. At last report, the fund's duration was just over 6 years, which implies that if rates rise one percentage point, the fund's net asset value will drop 6%.

The fund's 4.8% return over the past 12 months ranks among the top 15% of its intermediate core-plus bond fund peers. It yields 4.9%.

NEW→ Vanguard Core Bond ETF

• Kip ETF classification: Core bond fund
• SEC yield: 4.8%
• Expense ratio: 0.10%

This intermediate-term bond ETF launched in December 2023, so it has a short track record. But the trio of managers behind the actively managed Vanguard Core Bond ETF (VCRB) also run a mutual fund using a similar investment approach, and that fund has a much longer track record.

Over the past 10 years, the mutual fund's annualized return ranks among the top 24% of its peers (intermediate-term core bond funds). Although the ETF and the mutual fund are separate and distinct funds, "all of the guardrails are the same, and the decision-makers are the same," says Rebecca Venter, a senior fixed-income client portfolio manager at Vanguard.

The managers aim to beat the Agg with no added volatility by investing in a mix of high-quality debt and keeping a keen eye on risk. They've delivered on that in the mutual fund. In the ETF? So far, so good. Over the past two years, Vanguard Core Bond's 5.5% annualized return beat the 3.8% gain in the Agg, with the same volatility.

Investors who want a tamer core bond fund — one that doesn't dip too heavily into high-yield debt — should consider this ETF. Close to 97% of the fund's assets are rated investment grade. Treasuries and government mortgage-backed debt make up 48% of the portfolio; corporate bonds, nearly 33%; dollar-denominated foreign-government IOUs, more than 11%; and asset-backed securities, 4%. The rest is cash or other securities.

Finally, with an annual expense ratio of 0.10%, you won't find a less-expensive actively managed core bond fund than Vanguard Core Bond. That ratio is "the very bottom cost for active core ETFs," says Venter.

iShares Short Duration Bond Active ETF

• Kip ETF classification: Opportunistic bond fund
• SEC yield: 4.3%
• Expense ratio: 0.25%

When we added the iShares Short Duration Bond Active ETF (NEAR) to the ETF 20 roster in 2024, interest rates were at multidecade highs, and strategists were divided on whether the Federal Reserve would cut short-term rates or leave them higher for longer. We viewed this actively managed ETF as one way to thread the needle of uncertainty between potential interest rate moves but still earn a decent yield.

Since we added the fund to the ETF 20 roster, it has returned 5% annualized, eking past the 4.9% gain in the Bloomberg U.S. Aggregate Bond Index and in line with its peers (short-term bond funds).

The fund's positioning still offers bond investors some advantages. Strategists are again divided on whether the Fed will hike or cut rates next. This fund's 2-year duration implies that if interest rates fall one percentage point, its net asset value will rise by 2%. But if rates rise, as some strategists now expect, the impact will be a 2% drop in net asset value for every percentage point increase.

Since the start of the Iran war through June, two-year Treasury yields have climbed to 4.1% from 3.4%. Short Duration Bond has held steady, with a 0.1% return over that period. By contrast, the Agg index, which sports a 5.7-year duration, has declined 1%.

The fund, which holds a mix of government, corporate and asset-backed debt, yields 4.3%.

JPMorgan Income ETF

• Kip ETF classification: Opportunistic bond fund
• SEC yield: 5.9%
• Expense ratio: 0.39%

The actively managed JPMorgan Income ETF (JPIE) does double duty, providing a steady monthly payout as it navigates which bond sectors to emphasize at any given time, whether high-yield debt, Treasuries, mortgage-backed securities or emerging-markets IOUs.

Over the past three years, the fund's 6.7% annualized return beat the Agg index's 4.2% return by a wide margin.

These days, the fund's three comanagers have positioned the fund with a big slug of government-backed mortgage securities (35% of the fund's assets), and that has helped recent returns. A mix of mortgage- and asset-backed securities (34% of assets), high-yield and investment-grade corporate debt (13%), emerging-markets debt (6%) and cash (12%) make up the rest of the portfolio. The fund yields 5.9%.

Pimco 0-5 Year High Yield Corporate Bond ETF

• Kip ETF classification: Opportunistic bond fund
• SEC yield: 6.5%
• Expense ratio: 0.56%

Last year, co-manager David Forgash said the high-yield market was a good place to be. True words: The Pimco 0–5 Year High Yield Corporate Bond ETF (HYS) has returned 5.8% over the past 12 months. It's the top-performing bond fund in the Kip ETF 20, and it beats 67% of its peers.

The fund holds mostly one- to five-year maturity junk bonds, and that shorter-term orientation helped. While interest rates have inched up over the past year, short-maturity debt is less sensitive to interest rate moves than longer-dated bonds. The fund boasts a relatively short 2-year duration.

These days, Pimco's experts favor an up-in-quality approach to high-yield debt, given current market conditions. That's where much of the fund's assets sit: 36% of its assets are invested in double-B-rated debt (the highest junk tier); another 40% of assets are in single-B. The fund's short-term tilt and its current 6.5% yield provide some cushion in the event of a rise in defaults.

Kiplinger ETF 20 model portfolios

Use these as a framework to building your own portfolio, tweaking where necessary to tailor it to your tolerance for risk and your investment time horizon.

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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