Many 401(k) retirement accounts are heavily weighted with mutual funds because investors rely on default choices when it comes to their investment selections. They may be unaware that there could be better options for them. Exchange traded funds (ETFs) have a more transparent fee structure, can be traded in a more granular way, and boast much less overhead. That translates into fewer annual fees to drag down your portfolio's returns.

1. SPDR S&P 500 ETF (SPY)

• Issuer: State Street SPDR
• Dividend: $5.57
• Expense ratio: 0.09%

The Standard and Poor's 500 Index (S&P 500) has long been seen as the bellwether index for the US stock market. S&P 500 index funds have been a favorite retirement holding for decades. SPY just repackages this old standby, with lower expenses and less paperwork than traditional index funds. This ETF is an excellent addition to any 401(k) portfolio, and institutional investors will tell you that S&P 500 index funds should play a role in most retirement accounts.

2. The Vanguard Total Stock Market ETF (VTI)

• Issuer: Vanguard
• Dividend: $2.80
• Expense ratio: 0.03%

Vanguard's Total Stock Market ETF is an alternative to other market index funds. VTI gives investors exposure across the entire Nasdaq and NYSE, with securities from every sector and segment. This ETF has a rock-bottom expense ratio, a massive amount of assets under management, and a good track record with solid returns.

3. The iShares Core U.S. Aggregate Bond ETF (AGG)

• Issuer: BlackRock iShares​
• Dividend: $2.18
• Expense ratio: 0.04%

The long-term stability of the bond market makes AGG an excellent choice for young investors who need rock-solid assets in their 401(k). AGG gives investors a stake in the bond market without requiring a set amount of time for maturation. That kind of flexibility, along with steady performance, makes this ETF a good choice for a 401(k), despite the relatively low returns.

4. The iShares MSCI Emerging Markets ETF (EEM)

• Issuer: BlackRock iShares​
• Dividend: $0.76
• Expense ratio: 0.70%

Emerging markets can be exciting because they’re volatile, which isn’t always the best trait for a retirement investment. But the iShares MSCI Emerging Markets ETF is a good way to add a controlled amount of volatility to your retirement fund. The key is to be judicious and not overexpose your retirement to emerging markets without anchoring your 401(k) in bonds and index funds.

5. The Vanguard Value ETF (VTV)

• Issuer: Vanguard
• Dividend: $2.95
• Expense ratio: 0.04%

VTV gives investors exposure to a range of large-cap securities, like JP Morgan Chase, Procter & Gamble, Johnson & Johnson, and Berkshire Hathaway. Adding an ETF like Vanguard Value to your 401(k) is a great way to diversify away from index funds while still keeping your risk relatively low.

6. The iShares Russell 2000 ETF (IWM)

• Issuer: iShares​
• Dividend: $1.90
• Expense ratio: 0.19%

In a way, the Russell 2000 Index is a counterpart to the S&P 500. Instead of following 500 blue chips, the Russell indexes 2,000 small-cap securities. The iShares Russell 2000 ETF is a great addition to your 401(k) if you believe that most of the growth in the American economy over the next 20 years is going to come from smaller businesses. IWM gives investors a share of the Russell index with a relatively low expense ratio, which makes it uniquely suited for long-term investing.

7. The iShares iBoxx $ High Yield Corporate Bond ETF (HYG)

• Issuer: iShares
• Dividend: $3.89
• Expense ratio: 0.48%

Corporate bonds can be a good alternative to Treasury notes as they offer investors higher returns on secured debt. The iShares iBoxx $ High Yield Corporate Bond ETF focuses on corporations with a BB bond rating, mixing in a few AAA bonds with some that are rated B and lower. Adding HYG to your 401(k) is a good way to mix some corporate notes in with your government bonds.