Insider Monkey

11 Best Low Risk Index Funds to Buy

Fahad Saleem
8 min read

In This Article:

In this article, we will take a look at the 11 best low risk index funds to buy. To see more such companies, go directly to 5 Best Low Risk Index Funds to Buy.

Index funds have seen a rise in popularity among investors lately thanks to the lower costs, flexibility and the variety of opportunities they provide to investors to hedge against risks. A Wall Street Journal report shared an interesting data point which shows the rise of index funds. By 2021, “two of every five dollars invested in funds was held in index funds specifically—more than twice the share they held a decade earlier.”

The popularity of index funds is part of the broader shift to passive investing. A study by Morningstar says that only one out of every four active funds posted better returns when compared to passive funds over a ten-year period.

Similarly, ETFs have also shot up in popularity in nearly all financial markets of the world. In Europe, where a strict regulatory environment and rules tend to have limited the number of investing opportunities available to average investors, ETFs are seeing expansion and major financial institutions are competing with each other in the space. For example, earlier this year, JPMorgan launched two ETFs in Europe. These ETFs will be meeting all regulations imposed by Europe.  These ETFs are focused on ESG investing, a theme highly popular in Europe and in-line with the continent’s long-term carbon emissions goals. A Bloomberg report said that ESG ETFs have seen a lot of positive trends in Europe, unlike declines in the US and other parts of the world.

Fees Wars in the Index Fund World: "Heaven for Investors"

The rising competition in index fund offerings is boding extremely well for investors and causing companies to keep lowering their fees to attract new investors. For example, recently, State Street decreased its fee for SPDR Portfolio S&P 500 ETF (NYSEARCA:SPLG) to just 0.02%. That means if you invest $1,000 in SPLG you’ll have to pay just 20 cents a year in fees.

A Wall Street Journal report took a look at this development in detail and talked to several market experts on what exactly is going on in the industry and how the fees wars are unfolding. The report quoted Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, who said that the lowering of fees is “hell for issuers” but "heaven for investors."

Perhaps the biggest and most obvious benefit of lowering fees is new inflows even during tough economic times like today. For example, when State slashed its fee for the SPDR Portfolio High Yield Bond ETF to 0.05% from 0.1% earlier this year, it saw inflows of a whopping $611 million in just one month.

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