Surprise: ETF Fees Are Going Up
Reader Comments
A simple question
Aside from management fees, does anyone below have any idea how much money goes from investors (as a group) to market-makers (as a group) on the difference between bid and ask in the daily trading of these things? If so, please share what you know.
I have a feeling most of us don't know the full score on why ETFs are springing up faster than weeds.
Fees are based on strategy
One reason ETF fees are going up is because the providers are creating more products based on actively managed 'strategy indexes' rather than simple ‘market indexes’. For example, ETFs based on indexes that follow a fundamental weighting strategy are on average more than three times more expensive than comparable capitalization weighted ETFs. ETFs that follow a quantitative security selection strategy are eight times more expensive than ETFs that follow 'market indexes.' For more information, see THE ETF BOOK. Also, for a great database on index strategy and cost, see www.ETFguide.com.
