Surprise: ETF Fees Are Going Up

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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.

Richard Ferri, author of THE ETF BOOK of MI @ Jul 11, 2008 12:42:38 PM

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.

Daniel David of NM @ Jul 09, 2008 13:16:18 PM

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New Money

Katy Marquardt, a senior editor at U.S.News & World Report, takes a contemporary look at happenings in the financial world and aims to help young investors get going with their portfolios--or just sound cool at cocktail parties. Have a question? E-mail Katy at newmoney@usnews.com

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