IC Top 50 ETFs 2024: The best, low-cost ETFs for a diversified starting portfolio

We highlight the 50 ETFs providing targeted, cheap and efficient market exposures. The list spans a broad spectrum of investment needs, from broad core funds designed to capture the main drivers of global equities and fixed income, to carefully chosen niche options that offer targeted exposure without venturing far outside the mainstream. The Investors’ Chronicle Top 50 ETFs list is now in its 11th year and continues to serve the same purpose as always: it highlights the exchange-traded funds (ETFs) we view as the most useful low-cost starting points for an investment portfolio. As a general rule, we tend to look for funds that track the most appropriate index, stick to a robust process and offer a mix of competitive pricing and good liquidity.

The ETF landscape has evolved rapidly over the past decade, driven by enhancements in market structure, the proliferation of new asset classes, and the ongoing drive toward cost efficiency. Investors increasingly expect transparent access to a wide array of asset classes, geographies, and investment styles with low friction and predictable outcomes. In this context, low-cost, transparent vehicles like ETFs have become a cornerstone of many portfolios. Our coverage remains firmly grounded in practicality: we want funds that deliver meaningful market exposures with predictable execution, minimal drag, and a clear, repeatable methodology. The goal is not simply to identify cheap funds, but to identify starting points that offer reliable, replicable results that can serve as the backbone of a portfolio and be adapted as markets and personal circumstances change.

This introductory overview is followed by an in-depth exploration of how the Top 50 ETF framework operates, the principles behind its construction, and how investors can use the list to build resilient, cost-efficient portfolios. The subsequent sections provide a detailed look at the criteria we apply, the costs involved in ETF ownership, and the practical steps to implementing these ideas in real-world portfolios. The intent is to equip readers with a comprehensive, nuanced understanding of why selective ETF choices matter, how to balance core and satellite exposures, and how to navigate the evolving landscape without sacrificing simplicity or clarity.

Understanding the ETF landscape and the philosophy behind low-cost market exposures

ETFs have transformed the way investors access financial markets by combining the diversification benefits of mutual funds with the tradability of stocks. They are designed to track the performance of specific indices or baskets of assets, delivering exposure at a fraction of the cost of traditional actively managed funds. However, the reality of ETF investing goes beyond mere cost considerations. The most effective use of ETFs hinges on a thoughtful alignment between the instrument and the investor’s goals, risk tolerance, time horizon, and tax considerations. A central premise for our Top 50 list is that cheap, well-constructed market exposures can serve as the reliable groundwork for a long-term investment plan.

A core idea behind the list is that the best starting points are not merely the cheapest funds on offer, but those that most faithfully replicate a representative market or asset class through a robust, transparent process. We emphasize funds that track the most appropriate index for the intended exposure, rather than chasing the latest thematic fad or an index that is poorly aligned with the desired risk and return profile. In practice, this means favoring broad, well-established benchmarks with transparent methodologies and a track record of faithful replication. It also means preferring funds that maintain liquidity and a competitive pricing structure, so that neither entry nor exit from positions is unduly costly or complicated.

The philosophy also recognizes that different investors have different needs. A core fund may aim to capture the broad market’s risk and return, while additional positions may target specific regions, sectors, or investment styles. The list therefore encompasses a diversified mix of options that can form the building blocks of a portfolio, from global equity or sovereign-bond exposure to regional or sector tilts, and from broad-market broad-index trackers to focused strategies that still adhere to a disciplined, rules-based approach. The overarching aim is to provide low-cost, efficient market exposures that can be combined, rebalanced, and customized to reflect evolving financial goals and changing market conditions.

In-depth examination of the Top 50 ETF framework, its purpose, and how it serves investors

The Top 50 ETF framework is designed to function as a practical starting point for a wide spectrum of investors, from beginners laying the groundwork for a diversified portfolio to seasoned participants seeking to refine or optimize an ongoing strategy. The central purpose is to present a curated set of funds that can be employed as reliable anchors in a portfolio, rather than an exhaustive directory meant to overwhelm with options. The curation rests on several core principles that we apply consistently across the selection process:

• Targeting the most appropriate index: The foundational criterion is alignment with the objective of the exposure. We evaluate whether the fund tracks a benchmark that accurately represents the intended market, asset class, or segment and whether its index methodology remains coherent over time. The index must be transparent and replicable, with clear rules that govern inclusion, weighting, and rebalancing.

• Maintaining a robust process: The selection process emphasizes rigorous fund construction, governance, and ongoing monitoring. We assess the fund sponsor’s track record, the quality of their index methodology, and the procedures used to ensure accurate replication of the underlying index. The robustness of the process also extends to risk controls, governance standards, and the ability to withstand market stress.

• Pricing and liquidity balance: We seek a balance between competitiveness on price and accessibility in trading. Competitive expense ratios are important, but they must be accompanied by liquidity that ensures reasonable bid-ask spreads and efficient execution. A fund with low costs but thin liquidity can incur hidden costs through price impact and difficulty in entering or exiting positions.

• Range and diversity of offerings: The list spans a diversified set of options that cover broad market exposures and more targeted opportunities. The aim is to provide a toolkit that lets investors assemble a portfolio with a clear, logical structure—core exposures that capture the main market drivers, plus select niche or regional choices that enhance diversification without introducing undue complexity.

• Practical, real-world utility: The ETFs highlighted are chosen for their practical usefulness in a starting portfolio. They are selected with a view to the typical investor seeking a stable, repeatable, and low-friction approach to building wealth over time. The emphasis is on real-world applicability, not merely theoretical appeal.

The 11th-year continuity of the Top 50 list signals a persistent belief that thoughtful curation, grounded in fundamental investment principles, remains valuable even amid rapid product innovation. As markets evolve, the list is updated to reflect new fund launches, shifts in liquidity dynamics, and changes in cost structures, all with the objective of preserving a practical, reliable starting point for investors. The essence of the approach is stability coupled with adaptability: a framework that preserves core principles while incorporating improvements that arise from ongoing market experience and the emergence of new fund categories.

Criteria for selecting ETFs: Tracking the right index, robust processes, and a balance of pricing and liquidity

To understand why particular funds make the Top 50 cut, it is essential to dissect the criteria with a precise lens. Each candidate is evaluated on a set of interrelated factors, all of which contribute to the fund’s suitability as a low-cost, efficient market exposure. The following elements form the backbone of our evaluation process:

1. Tracking the most appropriate index

• The index must accurately represent the intended market or asset class.
• The methodology should be transparent, well-documented, and consistently applied.
• The index should be representative of the exposure, not overly narrow or biased toward a specific segment.

2. Robust, repeatable process

• The fund’s construction matches best-practice standards for tracking a benchmark.
• The issuer demonstrates strong governance, risk management, and oversight.
• Ongoing methodology changes should be minimal, well-communicated, and justified, with a clear impact on performance.

3. Competitive pricing and strong liquidity

• Expense ratio should be favorable relative to peers offering similar exposures.
• Trading liquidity should be robust, evidenced by tight spreads and significant daily volumes.
• The fund’s size (assets under management) should be sufficient to support efficient trading and reduce price impact.

4. Liquidity and market depth

• Liquidity in the primary and secondary markets is important for smooth execution.
• The capacity to handle large orders without significant slippage is a key consideration.
• Creation and redemption mechanics, where applicable, should facilitate efficient liquidity.

5. Tracking error and persistence

• The degree to which the ETF tracks its index, measured by tracking error, should be low and stable.
• Persistent tracking efficiency is preferred over funds with occasional, large deviations.

6. Replication method and construction quality

• Full replication (holding all index components) is generally preferred for accuracy, though sampling can be acceptable for very broad or expensive indices if managed carefully.
• The replication approach should align with the complexity and liquidity of the underlying constituents.

7. Tax efficiency and domicile

• Tax considerations vary by jurisdiction and can influence after-tax returns.
• The ETF’s domicile, distributions, and tax treatment should be suitable for the investor’s location and tax situation.

8. Fund size, stability, and sponsor reputation

• A sizeable, stable fund with a solid sponsor reduces the risk of closure and disruptions.
• A well-established sponsor typically provides better operational reliability, investor support, and governance.

9. Currency exposure and hedging where relevant

• For non-domestic exposures, currency risk can materially affect returns.
• The availability of currency hedged versions or transparent currency-related information helps investors manage this risk.

10. Diversification and fit within a portfolio

• The ETF should complement, not duplicate, existing allocations.
• It should contribute meaningful diversification benefits relative to the investor’s overall holdings.

This structured approach helps ensure that the funds included in the Top 50 list meet a consistent standard of quality and usefulness for a broad audience. In practice, the selection process is iterative and responsive to market developments. When new funds enter the market, we evaluate them against the same criteria, maintain a conservative bias toward proven, liquid products, and consider the potential trade-offs of newer vehicles only when their advantages are compelling and durable.

Cost structures, fees, and total cost of ownership in ETFs

One of the central attractions of ETFs is cost efficiency, but the landscape is nuanced. The top line expense ratio is only part of the picture; the total cost of ownership often depends on several interacting factors, including trading costs, spreads, tax considerations, and the specific mechanics of how a fund is structured. A thorough understanding of these costs is essential for accurately assessing the real-world performance you can expect from any ETF.

• Expense ratio: This is the annual fee charged by the fund manager, expressed as a percentage of assets. In the scope of a well-constructed Top 50 ETF, we generally look for lower expense ratios relative to the asset class and benchmark, recognizing that in the ETF ecosystem there is a broad spectrum of costs. The key is whether the expense ratio competitively reflects the value provided, in light of tracking quality, liquidity, and the breadth of exposure.

• Trading costs and spreads: When buying or selling ETFs, investors incur bid-ask spreads and, in some cases, commissions or slippage in the price at which orders are executed. Spreads can vary by liquidity, time of day, market conditions, and the specific ETF’s trading activity. A fund with tight spreads and solid liquidity minimizes these additional costs, particularly for regular traders or those implementing rebalancing strategies.

• Creation and redemption costs: For funds that use the creation/redemption mechanism, there are sometimes implicit costs associated with this process. In practice, the in-kind creation and redemption process can help minimize cash drag and tracking error, but it may also introduce other considerations for large or unusual orders. Understanding how a fund accesses liquidity and manages in-kind transactions can illuminate the true cost of ownership.

• Tax efficiency: ETFs are often perceived as tax-efficient vehicles, particularly in jurisdictions where in-kind creation and redemption can reduce capital gains distributions. However, tax treatment varies by country, and the investor’s own tax situation matters. While tax efficiency is an important consideration, it should be weighed alongside other factors such as liquidity, tracking quality, and portfolio fit.

• Index-risk drag and replication costs: Some indices are more complex than others, and replication can be more expensive for certain exposures. If a fund uses sampling instead of full replication to track a broad or illiquid index, there may be a modest tracking error premium that investors should assess against potential cost savings elsewhere.

• Reinvested dividends and total return features: Some ETFs distribute income, while others reinvest distributions automatically. The choice can influence cash flow planning and tax outcomes, particularly for investors seeking income or those operating within tax-advantaged accounts.

• Time horizon implications: The impact of costs is magnified over longer horizons. Small differences in expense ratios can translate into meaningful differences in ending wealth due to compounding effects. In planning, it is essential to consider the expected time horizon and how different cost structures will accumulate over time.

• Net cost of ownership assessment: A practical approach is to compare funds on a net basis, considering both the expense ratio and the expected spread costs given typical trade sizes and account practices. This holistic view helps investors avoid overemphasizing a single cost metric at the expense of overall effectiveness.

The mix of pricing and liquidity, along with the fund’s size and replication approach, determines whether a given ETF represents a compelling starting point. The Top 50 list is designed to spotlight those funds where the net effect of these costs, combined with reliable exposure and robust process, yields a favorable balance for long-term investors. In practice, this means selecting funds that deliver clean, low-cost exposure to an index with a transparent method, supported by a liquid market that keeps implementation frictions to a minimum.

Liquidity and market depth: practical implications for a starting portfolio

Liquidity is a critical driver of an ETF’s usability, particularly for new investors building a starter portfolio and for those who periodically rebalance. The practical importance of liquidity extends beyond the ability to execute a trade at a reasonable price; it also influences how readily a position can be adjusted in response to market movements, new information, or changes in investment objectives.

• Primary vs. secondary market liquidity: ETF liquidity can be thought of in terms of both the primary market (where creation and redemption occur) and the secondary market (where investors trade on an exchange). A fund can have strong liquidity in the secondary market even if the underlying components are less liquid, thanks to the arbitrage mechanism that keeps the ETF price in line with the net asset value. Conversely, poor primary market liquidity can create structural challenges for large investors seeking to enter or exit sizable positions.

• Bid-ask spreads and trading volume: Narrow spreads and high average daily trading volume are good indicators of liquidity. For a starting portfolio, choosing funds with strong liquidity helps reduce the cost of entering positions and improves the likelihood of efficient execution during routine rebalancing.

• Creation/redemption activity and market stress: In stressed markets, liquidity can contract quickly. Funds with robust sponsor support, well-established market makers, and transparent creation/redemption processes tend to maintain more stable liquidity. This stability is particularly valuable for a starter portfolio that expects to evolve over time rather than remain static.

• Diversification of exposure within the ETF and across the portfolio: When a portfolio includes multiple ETFs, it is essential to avoid unintended crowding into a few highly liquid names that might inadvertently dominate the overall liquidity profile. Balanced layering across broad exposures and complementary niche exposures helps maintain overall liquidity while preserving diversification.

• Currency considerations: For international exposures, liquidity can be influenced by FX dynamics, settlement cycles, and regional market structures. Investors should be mindful of whether an ETF offers currency-hedged options or unhedged exposures, depending on their currency risk preferences and tax considerations.

• Practical testing and awareness: Before committing a significant portion of capital, investors can test a small position in a highly liquid ETF and observe execution quality, price behavior, and any operational frictions. This practice reduces the risk of surprises when scaling up positions in response to changing market conditions.

In practice, a well-constructed Core Portfolio built from the Top 50 ETF list emphasizes funds with robust liquidity profiles and clear, repeatable processes. The goal is to ensure that the starting portfolio can be implemented smoothly, with the capacity to adjust allocations over time as the investor’s goals, risk tolerance, and market conditions evolve. This approach provides a practical foundation for long-term investing, with the room to add specialized exposures as needed without sacrificing the ease of implementation and cost efficiency that characterizes the broader ETF landscape.

Core exposure and satellite positioning: building a diversified portfolio with the Top 50 framework

A practical starting point for many investors is to use the Top 50 ETF framework to construct a core-satellite portfolio. This approach balances broad market exposure with targeted tilts that reflect individual preferences, risk tolerance, and income needs. The core typically comprises broad, low-cost, highly diversified funds designed to capture the heart of the market. Satellite positions then provide exposure to specific regions, sectors, or investment styles that complement the core and potentially offer enhanced diversification or return potential.

• Core exposure principles: The core is usually built from broad-market or global indices that reflect the primary drivers of broad equity and fixed-income markets. In the context of the Top 50 list, core funds should emphasize broad coverage, high liquidity, low costs, and robust replication. The aim is to establish a stable, scalable foundation that remains relevant across different market regimes.

• Satellite exposure principles: Satellites are intended to supplement the core with targeted tilts, such as regional growth opportunities, commodity-related exposures, or sector-specific themes. These positions should be sized prudently to avoid overt concentration risk and to preserve the core’s stability. The selection of satellite funds should be guided by clear hypotheses about potential risk-adjusted returns, supported by evidence of robust methodology and liquidity.

• Diversification and risk management: A core-satellite approach can improve diversification if implemented thoughtfully. The Top 50 framework provides a toolset of options to help investors assemble a diversified mix that addresses geographic coverage, sector exposure, and investment style while maintaining a disciplined cost structure. Regular rebalancing ensures the portfolio remains aligned with long-term objectives and risk tolerances.

• Rebalancing discipline: Rebalancing frequency and thresholds should be determined by the investor’s objectives and tax considerations. A systematic approach reduces drift and keeps risk characteristics aligned with the target profile. Rebalancing can be performed through calendar-based schedules or threshold-based triggers, with careful attention paid to transaction costs and tax implications.

• Scenario planning and stress testing: Investors should test how their core-satellite portfolios might perform under different market scenarios. By evaluating a range of environments—bull, bear, and stagnant markets— Investors can gauge the resilience of their exposures and fine-tune allocations to improve downside protection and upside participation.

Thematic and niche ETFs: benefits, caveats, and the role in a starting portfolio

The Top 50 ETF framework also includes thematic and niche options, which can offer distinctive sources of return when used judiciously. These funds provide targeted exposure to themes such as technology, energy transition, or demographic shifts. They can be attractive for investors seeking to tilt a portfolio toward long-term secular trends while maintaining a low-cost, transparent vehicle.

• Benefits of thematic or niche ETFs: Thematic ETFs can deliver exposure to growth opportunities that might be difficult to capture through broad-market indices alone. They provide a straightforward way to express views on specific industries, megatrends, or innovation themes. When added to a diversified core, they can potentially enhance returns and provide a complementary source of risk.

• Cautions and caveats: Thematic exposures can exhibit higher volatility and more pronounced drawdowns compared to broad-market investments. Because these funds are often concentrated in particular sectors or themes, their performance can diverge significantly from the broader market. Tracking error, liquidity constraints, and the risk of rapid turnover in popularity are additional concerns to consider.

• Role within a starter portfolio: Thematic ETFs can be used sparingly as satellite positions, added to the core exposures in measured increments. Investors should ensure that the size of these positions remains modest relative to the overall portfolio and that they complement rather than dominate the risk profile. Transparent, robust fund construction and liquidity are essential for any thematic exposure to avoid execution challenges and hidden costs.

• Monitoring and risk controls: Thematic investments require active monitoring because their performance can be sensitive to macro shifts, policy actions, and technological breakthroughs. Investors should maintain clear exit strategies, predefined risk limits, and regular reviews of the rationale behind each thematic position to prevent the portfolio from becoming overly speculative or misaligned with long-term objectives.

Practical steps to constructing a starter portfolio with the Top 50 list

Implementing the Top 50 framework in a practical, actionable way involves a structured process that begins with clear goals and ends with a disciplined execution and ongoing management routine. The following step-by-step approach is designed to translate the theory into a viable, long-term plan that a broad audience can adapt to their own circumstances.

1. Define objectives and constraints

• Establish clear financial goals, time horizon, and risk tolerance.
• Consider tax considerations, account types, and liquidity needs.
• Set realistic expectations for returns and the role of each ETF in the portfolio.

2. Map exposures to a core-satellite framework

• Identify core exposures that should form the backbone of the portfolio, focusing on broad, low-cost, liquid ETFs.
• Determine satellite exposures to address regional tilts, sector bets, or thematic opportunities, allocating a smaller portion of capital to these positions.

3. Select core ETFs from the Top 50

• Prioritize broad-market index trackers with high liquidity, low costs, and robust replication.
• Ensure the chosen core ETFs align with the investor’s geographic and asset-class preferences (e.g., global developed markets, broad core fixed income).

4. Add satellite exposures with care

• Choose niche or thematic ETFs only after ensuring they meet criteria for liquidity, cost, and trackability.
• Limit size to avoid concentration risk and ensure diversification remains intact.

5. Consider currency and tax implications

• Decide whether currency-hedged or unhedged exposures are appropriate given the investor’s domicile and tax situation.
• Factor in tax efficiency, distributions, and timing considerations for tax planning.

6. Plan for rebalancing and monitoring

• Establish a rebalancing framework with predetermined thresholds or schedules.
• Monitor tracking error, liquidity, and cost changes; reassess the portfolio periodically.

7. Execute with attention to costs

• Use limit orders where appropriate to control execution price and minimize slippage.
• Consider the overall cost of ownership, including spreads and potential tax consequences.

8. Test and refine

• Run scenario analyses to understand how the portfolio would behave under different market conditions.
• Adjust allocations as needed to maintain the desired risk-return profile.

9. Document rationale and maintain discipline

• Keep a clear record of the reasons for choosing each ETF and how it fits the overall strategy.
• Maintain discipline to avoid overreacting to short-term market fluctuations.

10. Regular reviews and updates

• Revisit the Top 50 framework annually or whenever significant changes occur in the ETF landscape.
• Replace or adjust holdings as needed to maintain alignment with long-term objectives and market realities.

The evolving landscape and future considerations

The ETF market continues to evolve, and the Top 50 framework must adapt accordingly. New products emerge with innovative approaches to indexing, replication, and trading efficiencies, while some existing funds may modify their strategies, incur changes in liquidity, or even close. The continued emphasis on low costs, robust methodology, and broad liquidity remains central to the framework, but investors should remain vigilant about shifts in market structure, regulatory considerations, and macroeconomic dynamics that could impact the viability of certain exposures.

• Market structure and efficiency: Improvements in trading infrastructure, market-making, and liquidity provision affect how easily ETFs can be traded and how costs are distributed between buyers and sellers. As these elements evolve, the practical cost of ownership can shift in meaningful ways.

• The balance between core and thematic investing: The capture of secular growth themes remains attractive for some investors, but it also introduces greater volatility and potential concentration risk. The Top 50 framework emphasizes disciplined, scalable core exposures complemented by thoughtfully selected satellite positions, with careful attention to liquidity and cost.

• Global diversification and regional exposure: The ETF universe continues to expand across geographies, reducing barriers to access for investors seeking global diversification. The framework favors funds that deliver clear, investable exposures while minimizing complexity and hidden costs.

• Tax considerations and regulatory developments: Tax regimes and regulatory rules can have material implications for ETF investors. The framework remains responsive to changes that affect tax efficiency, distributions, and the overall structure of the ETF market.

• The risk of product closures and changes in liquidity: Investors should be aware that ETFs can discontinue or alter investor terms. Maintaining a diversified portfolio across a broad range of core exposures helps mitigate the impact of any single fund’s termination or liquidity shift.

• Sustainability and ESG considerations: As investors increasingly incorporate environmental, social, and governance criteria or other sustainability considerations, new ETF offerings may emerge. The Top 50 framework can incorporate these innovations while maintaining its core focus on cost, liquidity, and robust tracking.

The practical, real-world utility of the Top 50 ETF framework

In practice, the Top 50 ETF list is most valuable when used as a disciplined starting point rather than a rigid blueprint. It offers a curated menu of options that balance cost and exposure quality with liquidity and reliability. Investors can leverage the list to assemble a coherent, cost-efficient portfolio that reflects their individual goals, while staying adaptable as circumstances change. The emphasis on tracking the most appropriate indices, robust process integrity, and a prudent balance of pricing and liquidity helps ensure that the core of a portfolio remains solid and scalable.

The list’s strength lies in clarity and accessibility. By focusing on funds that deliver straightforward market exposures with transparent rules and robust liquidity, it provides a practical framework that many investors can implement without requiring specialized knowledge or excessive maintenance. The curated approach helps avoid decision paralysis that can arise from an overwhelming volume of ETF options, while still providing room for customization through selective satellite investments.

Conclusion

The Investors’ Chronicle Top 50 ETFs list stands as a longstanding, practical guide to building low-cost, efficient market exposures. The framework emphasizes funds that track the most appropriate indices, adhere to robust, repeatable processes, and combine competitive pricing with liquidity that supports straightforward trading and rebalancing. The list spans a diversified range of options—from broad core funds designed to capture the essential drivers of global markets to niche and thematic selections that enable targeted tilts within a controlled risk framework.

Investors looking to construct a starting portfolio can rely on the Top 50 framework as a solid foundation, using core exposures to establish a stable base and satellite positions to introduce intentional tilts and diversification. The emphasis on cost efficiency, demonstrated through careful attention to expense ratios, trading costs, and replication strategies, helps ensure that the path to long-term growth remains efficient and sustainable. At the same time, the framework acknowledges the importance of practical considerations such as liquidity, tax efficiency, and the potential implications of currency exposure, all of which influence real-world performance.

Ultimately, the Top 50 ETF list is a practical, continuously evolving resource designed to help investors navigate the complex ETF landscape with clarity and confidence. It serves as a reliable starting point for building a disciplined, cost-conscious investment strategy that aims to achieve broad market exposure, prudent diversification, and a clear approach to ongoing portfolio management. By focusing on the most appropriate indices, a robust process, and a careful balance of cost and liquidity, investors can use the list to craft a portfolio that is both resilient and adaptable to changing market conditions. The framework’s enduring value lies in its ability to translate market complexity into a manageable, actionable plan that supports long-term financial goals.