Best Index Funds for a Low-Priced Portfolio

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

different colored balls each in their own square of a divided board
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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 health care.

Among the most popular is the Vanguard S&P 500 ETF (VOO), which tracks the S&P 500 Index and currently has around $600 billion in assets under management.

Why should you invest in index funds?

One reason, writes Kiplinger contributor Coryanne Hicks, is for their low cost.

"When you go shopping, would you rather pay in pennies or dollars? Obviously, it's much easier to hand over a single dollar bill than it is to count out 100 pennies. A similar concept can be applied to an index fund," Hicks writes in her article on what is an index fund. "If you want to invest in the S&P 500, you could go out and buy shares in each of the 500 companies within the index, or you could find an S&P 500 index fund and buy a single share of that."

Another reason comes from Dan Burrows, senior investing writer at Kiplinger.com. "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."

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. And this lowers the risk of one stock torpedoing your return.

With this in mind, here are nine 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 March 26. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds.

Will Ashworth
Contributing Writer, Kiplinger.com

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.