If you’re looking for the best ETRADE index funds to build a long-term investment portfolio, ETRADE’s new lineup of no-fee mutual funds deserves a closer look. In 2025, ETRADE introduced five index funds with a 0% expense ratio, making them some of the lowest-cost investment options available.
At first glance, zero fees sound like an unbeatable deal. However, there’s an important trade-off that investors should understand before investing. In this guide, we’ll rank the five funds, explain what each one invests in, and discuss whether these ETRADE index funds are actually the right choice for your portfolio.
Why ETRADE Index Funds Are Getting So Much Attention
Most low-cost index funds still charge a small annual expense ratio. For example, many popular Vanguard index funds charge around 0.03% annually, which is already considered extremely inexpensive.
E*TRADE’s newest ETRADE index funds take things one step further by charging 0% management fees. While the savings may seem small, they can add up over time.
However, cost isn’t the only factor investors should evaluate. Flexibility, portability, and tax implications are just as important.
1. ETLGX – E*TRADE No-Fee Large Cap Index Fund
ETLGX is E*TRADE’s large-cap U.S. stock fund and closely resembles an S&P 500 index fund.
What It Invests In
The fund tracks the United States 500 Index and holds approximately 500 of the largest publicly traded American companies, including:
- Apple
- Microsoft
- Nvidia
- Amazon
- Other major blue-chip companies
Because it focuses on large-cap stocks, ETLGX performs similarly to traditional S&P 500 funds such as Vanguard’s VOO.
Best For
Investors who want exposure to America’s biggest companies while paying no annual fund expenses.
2. ETOX – E*TRADE Total Market Index Fund
For many investors, ETOX is the strongest option among all ETRADE index funds.
What It Invests In
Instead of owning only large-cap companies, ETOX tracks the United States 3000 Index, covering approximately 95% of the entire investable U.S. stock market.
It includes:
- Mega-cap stocks
- Large-cap companies
- Mid-cap businesses
- Small-cap companies
The fund uses a sampling strategy and owns roughly 2,100 securities.
ETLGX vs. ETOX
Choosing between these two funds is similar to deciding between an S&P 500 fund and a total market fund.
Choose ETLGX if you:
- Prefer to focus on large U.S. companies
- Want a traditional S&P 500-style portfolio
Choose ETOX if you:
- Want the broadest possible U.S. stock exposure
- Prefer to own companies of all sizes
In practice, both funds perform similarly because many of the largest companies dominate both portfolios.
3. ETISX – International Index Fund
While the first two funds focus entirely on U.S. companies, ETISX adds global diversification.
What It Invests In
The fund owns nearly 1,000 companies from developed international markets, including businesses from:
- Europe
- Japan
- Canada
- Australia
Some recognizable names include:
- Toyota
- Nestlé
- SAP
- AstraZeneca
One Important Limitation
ETISX only includes developed markets.
It does not invest in emerging economies such as:
- China
- India
- Brazil
Investors seeking broader international exposure may eventually want a separate emerging markets fund.
4. ETBOX – U.S. Bond Index Fund
Stocks help grow wealth, but bonds help reduce risk.
ETBOX tracks an investment-grade U.S. bond index containing government bonds and high-quality corporate bonds.
Why Investors Own Bond Funds
Unlike stock funds, bond funds are designed to:
- Reduce overall portfolio volatility
- Generate steady interest income
- Help cushion losses during market downturns
Younger investors may not need much bond exposure, but as retirement approaches, bond allocations often become increasingly important.
5. ETMUX – Municipal Bond Index Fund
ETMUX is the most specialized fund in the lineup.
What It Invests In
The fund owns investment-grade municipal bonds issued by:
- State governments
- Cities
- School districts
- Public transportation agencies
Why Municipal Bonds Are Different
Municipal bond interest is generally:
- Exempt from federal income tax
- Sometimes exempt from state taxes as well
This makes ETMUX especially attractive for investors in higher tax brackets who hold investments in taxable brokerage accounts.
For lower-income investors, traditional taxable bond funds may still provide better after-tax returns.
The Biggest Catch With ETRADE Index Funds
Although the zero expense ratio is appealing, there is one significant downside.
These ETRADE index funds are exclusive to E*TRADE.
That means:
- You can only purchase them through an E*TRADE account.
- You cannot transfer the funds directly to another brokerage.
- If you change brokers, you’ll have to sell the funds first.
Why This Matters
In an IRA or other retirement account, selling before transferring generally doesn’t create a tax issue.
However, in a taxable brokerage account, selling appreciated investments may trigger capital gains taxes before you can move your money elsewhere.
This “lock-in” effect is similar to other brokerage-exclusive zero-fee funds.
Are the 0% Fees Worth It?
The actual savings from paying 0% instead of 0.03% are smaller than many investors expect.
For example:
- A $100,000 portfolio paying a 0.03% expense ratio costs about $30 per year.
- Over several decades, those savings may total a few thousand dollars.
While meaningful, those savings may not outweigh the inconvenience—or potential tax consequences—of being unable to transfer the funds directly to another brokerage.
Best Account Type for ETRADE Index Funds
Retirement Accounts
These funds are an excellent fit for:
- Traditional IRAs
- Roth IRAs
- Other tax-advantaged retirement accounts
Since selling investments inside these accounts generally doesn’t create taxable gains, the portability issue becomes much less important.
Taxable Brokerage Accounts
Investors should think more carefully before using these funds in taxable accounts.
If you expect to switch brokers in the future, owning brokerage-exclusive funds could create unnecessary tax costs later.
Mutual Funds vs. ETFs
Another important distinction is that these products are mutual funds, not ETFs.
That means:
- Orders execute once per day after the market closes.
- You invest by dollar amount instead of purchasing individual shares.
- They work well with automatic recurring investments.
- They’re ideal for dollar-cost averaging.
Long-term investors who automate weekly or monthly contributions may appreciate this simplicity.
Final Thoughts
The new lineup of ETRADE index funds offers an impressive combination of broad diversification and zero management fees. Funds like ETOX provide excellent core U.S. market exposure, while ETISX and ETBOX can help create a well-balanced long-term portfolio.
Still, investors shouldn’t focus exclusively on expense ratios. The inability to transfer these funds directly to another brokerage is a genuine consideration, especially for taxable accounts.
For retirement accounts, these no-fee funds can be an outstanding option. For taxable investing, however, flexibility and portability may be worth paying a tiny expense ratio for more widely available alternatives.
Ultimately, the best investment isn’t simply the one with the lowest fee—it’s the one that fits your long-term financial goals, allows you to stay invested for decades, and gives you the flexibility your future may require.
