ETF Comparison

Which ETF performs
better after fees?

Compare up to 4 ETFs by return, expense ratio, and net performance.

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Annual Return
Expense Ratio
Dividend Yield
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Common Questions
ETF Comparison FAQ

What is an expense ratio and why does it matter? ▾
The expense ratio is the annual fee charged by an ETF as a percentage of assets. At 7% annual return over 30 years, the difference between a 0.03% and 0.75% expense ratio compounds into roughly $30,000 on a $10,000 investment. Low expense ratios are one of the strongest predictors of long-term ETF performance.
What is the difference between an index ETF and an active ETF? ▾
Index ETFs passively track a benchmark. Active ETFs have managers making buy/sell decisions to try to outperform. Research consistently shows that over 90% of active large-cap managers underperform their benchmark over 20 years after fees.
What is tracking error? ▾
Tracking error measures how closely an ETF's returns match its benchmark index. For broad market ETFs from major providers like Vanguard, iShares, or Schwab, tracking error is typically minimal and not a primary concern for long-term investors.
Should I use sector ETFs or broad market ETFs? ▾
Broad market ETFs provide maximum diversification at minimum cost and are the recommended core for most portfolios. Sector ETFs concentrate exposure in one industry and increase single-sector risk. Most advisors recommend sector ETFs as small tactical additions, not core holdings.
How do I evaluate ETF liquidity? ▾
High-volume ETFs like SPY or VTI have extremely tight bid-ask spreads. Low-volume specialized ETFs may have wider spreads that add cost to every trade. For long-term investors who trade infrequently, liquidity matters less than for active traders.

How to Compare ETFs Before You Invest

ETFs (Exchange-Traded Funds) track indexes, sectors, commodities, or other asset baskets and trade on stock exchanges throughout the day like individual stocks. With over 3,000 ETFs available in the U.S. alone, comparison requires a clear framework. The most important factors: the expense ratio (annual cost), the index being tracked, the fund's size (assets under management), trading liquidity (daily volume and bid-ask spread), and how closely the ETF tracks its benchmark (tracking error).

Expense Ratios: Why Small Differences Compound Enormously

The expense ratio is the annual fee charged by the fund as a percentage of assets. A 0.03% expense ratio on a $10,000 investment costs $3/year. A 0.75% expense ratio costs $75/year — 25x more. At 7% annual return, $10,000 in a 0.03% fund grows to about $193,000 over 30 years. The same investment in a 0.75% fund grows to only $163,000 — a $30,000 difference from a fee difference that looks tiny. For broad market index ETFs, there's no evidence that higher-cost funds deliver better returns, making low expense ratio the single most important selection criterion.

Index ETFs vs. Actively Managed ETFs

Index ETFs passively track a benchmark index — buying all (or a representative sample of) the securities in the index in proportion to their weight. Active ETFs have managers making buy/sell decisions in an attempt to outperform the benchmark. Research consistently shows that the vast majority of active managers underperform their benchmark index over 10+ year periods, especially after fees. S&P Global's SPIVA reports have documented this for decades: over a 20-year period, more than 90% of actively managed large-cap U.S. funds underperform the S&P 500. This is why low-cost index ETFs are the default recommendation for long-term investors.

Understanding ETF Liquidity

ETF liquidity has two layers: the fund's trading volume (how easily you can buy/sell shares in the market) and the liquidity of the underlying holdings. A large ETF like SPY (S&P 500) trades hundreds of millions of dollars daily — bid-ask spreads are fractions of a penny and you can buy or sell instantly at market price. A small, specialized ETF might trade only a few hundred shares per day, creating wider spreads and potential difficulty executing large orders at favorable prices. For most long-term investors, this matters only at the margins — but for larger portfolios or frequent trading, liquidity costs can add up.

Sector ETFs vs. Broad Market ETFs

Broad market ETFs (total U.S. stock market, S&P 500, total international market) provide maximum diversification at minimum cost. Sector ETFs concentrate exposure in a specific industry — technology, healthcare, energy, real estate. Sector concentration can deliver higher returns if that sector outperforms, but it also increases volatility and single-sector risk. Most financial advisors recommend broad market ETFs as the core portfolio and sector ETFs, if any, as small tactical additions. Tilting too heavily toward any one sector — including popular ones like technology — significantly increases the risk of underperformance when that sector falls out of favor.

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