Compare the best cheap ETFs to buy in 2022

By: Prash Raval

When not researching stocks or trading, Prash can be found either on the golf course, walking his dog or… read more.

Updated: Jun 9, 2022

ETFs are an inexpensive way of investing in a basket of stocks. Each fund has its own fee structure and its expense ratio lets you know how much you should expect to pay. This beginners guide selects five of the best cheap ETFs, tells you how much they cost, and why you should consider investing in them. Read on to learn more.   

What are the top cheap ETFs to buy?

The table below includes the best cheap ETFs our investment experts have selected for the coming year. Continue scrolling to learn more about why they’ve made our list.

1. iShares Core S&P 500 ETF (NYSEARCA: IVV)

First on our list is the iShares Core. As its name suggests, it tracks the performance of the S&P 500 by holding every stock in the index. This includes some of the worlds largest businesses like Tesla, Amazon, Apple, and Microsoft. With an expense ratio of 0.03% it costs just $3 annually for every $10,000 invested. 

It contains companies from all sectors although technology, healthcare, and financials are where a large portion of the fund is invested. It employs a weighting system meaning some of its holdings are larger than others. For investors wanting broad exposure to large cap US stocks for little cost, the iShares Core is a top choice. 

2. Vanguard Total Stock Market ETF (NYSEARCA: VTI)

The Vanguard Total Stock Market ETF tracks the performance of the CRSP US Total Market Index. It invests in every stock that makes up the index, which is nearly 100% of the U.S. stock market. VTI is the oldest and largest ETF from Vanguard and holds over 4000 stocks. With an expense ratio of just 0.03%, it’s much cheaper than the average 0.8% of similar funds. 

As it casts its net over the whole market you’ll find a collection of large, mid, and small cap stocks. Its top three sectors are technology, consumer discretionary, and industrials. The fund is split fairly evenly with its largest holding Apple, amounting to just over 5% of its total. If you’re looking for broad exposure to the US stock market, for very little expense, then VTI is a good option. 

3. Invesco DB Commodity Index Tracking (NYSEARCA: DBC)

The Invesco DB Commodity Index Tracking Fund is one of the largest commodity ETFs with over $3.5 billion assets under management. Its expense ratio of 0.85% makes it a cheap way to invest in the broader commodity market. DBC works slightly differently to the previous two ETFs on our list and tracks the performance of the 14 most heavily traded commodity futures. 

This includes lots of energy commodities like gasoline, crude oil, and natural gas. However metals like gold and copper and soft commodities like corn, wheat, soybeans are also included. Adding a cheap commodity ETF to your portfolio is suitable for investors wanting a cost effective way to hedge against inflation and take advantage of soaring energy prices. 

4. Schwab International Equity ETF (NYSEARCA: SCHF)

The Schwab International Equity ETF is a good option if you want to invest in large and mid cap stocks in developed countries outside of the United States. The fund’s goal is to track the performance of the FTSE Developed Ex US index. It has nearly 1000 holdings and an expense ratio of 0.06%.

One of SCHFs key advantages is the diversification it can bring to your portfolio while giving you exposure to companies like Nestle, Samsung, and Shell. It has a balanced approach to individual stocks, sectors, and countries making it more stable than other international targeted ETFs. 

5. HSBC MSCI Emerging Markets ETF (LSE: HMEM)

Final place on our list goes to the HSBC MSCI Emerging Markets ETF. It has over $1 billion under management and invests in over 1000 stocks from Europe, Asia, and the Americas. While its classed as an ETF with global coverage, the majority of the fund holds Asian based companies like Tencent Holdings, Samsung, and The Taiwan Semiconductor Co. 

It splits its money across mainly large and mid cap stocks from a broad range of countries including Taiwan, China, India, and Brazil. Investing in HMEM is slightly higher risk than other ETFs on our list and is best suited to investors wanting exposure to the potential growth opportunities emerging markets provide. It has an expense ratio of 0.15%.

Where to buy the best cheap ETFs

If you want to buy shares in cheap ETFs you’ll first need to register with an online broker. Our investing experts have selected the best brokers around offering a variety of ETFs. Just click on any of the links below to get started in minutes.

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What is a cheap ETF?

It is an exchange traded fund that has low costs. All ETFs have fees associated with them, often referred to as an expense ratio. This is like a management fee that you need to pay the company that runs the fund. The fees will vary depending on the type of ETF and the firm providing it. In the case for our list above, we’ve included a range of ETFs covering different sectors while having very low expense ratios. 

Are cheap ETFs a good investment?

Yes they can be, although just because something is cheap, doesn’t always mean you’ll get value for money. When selecting an ETF, it’s best to first look at what it invests in and if it matches your investment criteria. Sometimes you’ll find that you may need to pay a little bit more to get an ETF that you’re happy with. 

However, as you will have read from our top five list above, it is possible to find large ETFs that perform well without having to pay substantial fees. Exchange traded funds are generally good investments as they offer exposure to a basket of stocks targeting specific industries, sectors, or geographies. 

When you do invest in an ETF it’s a good idea to stay up to date with the latest market news and analysis which you can do on any of the links below. You’ll also need to use a trusted online brokerage firm to get the best prices and access and you can check out our comparison table above for more information.