In the US, a high turnover rate of ETF underlying assets generally passes the cost to the investors who purchase those ETFs. Now multiple online traders such as Schwab and TD Ameritrade offer zero fee trading, does the ETF turnover rate still matter ?

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    Just speculation so I can't provide this as an answer, but I suspect that ETF manager aren't considered "retail" traders and thus had a different trading cost structure which is likely not affected much by $0 retail trades. – Michael Nov 29 '19 at 0:40
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    The ETF management won't have to go through a broker but can likely trade on the exchanges directly. The remaining costs include fees of the stock exchange (negligible at a volume), assorted costs such as for the custodian bank, but most importantly: the spread when trading. The spread is worse for illiquid securities, but the ETF may nevertheless be obligated to trade them. – amon Nov 29 '19 at 5:52

does the ETF turnover rate still matter ?

Yes. ETFs are not "retail traders" but "institutional traders" and will have different fee structures. Plus they have implicit transaction costs when rebalancing by having to pay the bid price when selling and the ask price when buying (called "crossing the spread").

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