S&P 500 INDEX funds are supposed to be all the same. So why do some charge more than others?

We asked Lipper to help us find the cheapest and most expensive S&P 500 funds available to retail investors. The results? The cheapest ones, by expense ratio, also tend to require bigger minimum investments. Fidelity Spartan US Equity Index Fund Advantage, for instance, boasts a super-low expense ratio of 0.06% but you have to invest at least $100,000 in it.

So, Lipper ran a second screen for us, finding the five cheapest and five most expensive S&P 500 funds available to retail investors, with minimum investments of $5,000 and under. (See chart below.) The rock-bottom award goes to E*TRADE S&P 500 Index Fund, with a 0.09% expense ratio, no load and no 12b-1 fees. The minimum investment is $5,000. The other four cheapest funds are also no-load. (Note: We didn't take into account performance data, since the funds track the same index, but there were differences in returns.)

The most expensive are the Rydex S&P 500 A and Rydex S&P 500 C funds. With the class C shares, you'll pay a higher expense ratio but smaller load when you sell your shares. With class A you have a lower expense ratio (due to lower 12b-1 fees) but you cough up a large upfront load. The other funds on the priciest list charge sales loads as well.

It basically comes down to three things: economies of scale, loads and the size of the fund, says Tom Roseen, Lipper's research manager for U.S. and Latin America. Vanguard, for instance, has such big index funds, including its popular 500 Index, that "it can afford to treat them as a commodity." But he cautions investors to take even the promising data with a grain of salt. "Keep in mind that many of the real low expense ratio funds have added account fees. For example, some of the funds charge investors $15 a year if the account falls, for example, below $10,000. So often these low rates are not as low as we think," Roseen says. As with all mutual funds, it pays to read the fine print of a prospectus before entering a buy order.

Best & Worst S&P 500 Index Funds (based on expense ratios)
Fund	Ticker	Expense Ratio %
Best*
E*TRADE S&P 500 Index Fund		0.09
Columbia Large Cap Index Fund;Z		0.14
Vanguard 500 Index Fund;Investor		0.15
DWS Equity 500 Index Fund;S		0.19
USAA S&P 500 Index Fund;Member		0.19
Worst**
Rydex S&P 500 Fund;C		2.25
Rydex S&P 500 Fund;A		1.55
State Farm S&P 500 Index Fund;B		1.48
UBS S&P 500 Index Fund;C		1.45
DWS S&P 500 Index Fund;B		1.40

Source: Lipper

*No-load funds.

**These funds also charge sales loads.

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