As such, most ETFs list “Shareholder Fees” as zero. The other component, transaction fees, is what you would pay your broker in trading commissions which vary from broker to broker. In the mutual fund world, many funds do charge a sales load anywhere from 0%-5%, but in the ETF world, such loads are nearly non-existent. When looking at funds in general, this component consists of a sales charge imposed on purchases that gets taken out from your initial investment and the second component is the transaction fees on purchases or redemptions. Most disclosures start off with something called the “Shareholder Fees”. Below is a snapshot of what the typical expense disclosure looks like: You can most likely find the relevant disclosure on the fund’s website as well, but the most detailed version is probably in the prospectus and you can usually find this in the first few pages. You can find a detailed break-down of the expenses for an Active ETF in its prospectus. Active ETF Expense Ratio Components:īreaking Down an Active ETF Expense Ratio We delve deeper into the details of what investors should look out for when analyzing expenses for actively-managed ETFs. The overall average ETF expense ratio for actively-managed ETFs in the US is higher than the average you would see for passive ETFs. Comparing costs within actively-managed ETFs is just as important as it would be for index ETFs.
The ETF arena now has so many investment options, that many areas in the market have become over-represented as more and more issuers come out with very similar looking ETFs competing solely on the basis of price. One of the most important factors to consider when analyzing and comparing ETF investment options is the expenses of the fund. How Much Does Your ETF Really Cost? Let’s Discuss an Active ETF Expense Ratio vs.
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