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I have an account with two different online brokers. I've noticed when comparing the two sites, that one of them seems to have lower expense ratios for ETFs than the other. Is this possible or am I missing something?

The brokerage with the generally lower expense ratio simply calls it the "expense ratio" while the other calls it the "total expense ratio". I'm guessing that this is where the difference lies, but I haven't been able to find out precisely what it is.

Can someone explain this? I'm still relatively new to investing.

  • did you check the prospectus? – littleadv Feb 25 '15 at 6:05
  • I just checked the prospectus for a few of the funds now. The expense ratio on the prospectus rarely matches that listed at the brokerages. – spiteball Feb 25 '15 at 14:14
  • For example, I'm looking at USO. On TradeKing the expense ratio is listed as 0.76%. On Etrade it is 0.61%. The in this case, the prospectus says 0.76%. – spiteball Feb 25 '15 at 14:28
  • Another example with UCO: TradeKing: 0.97% Etrade: 0.99% Proshares Website: 0.95% So what gives? Do the funds work out different rates with each broker? – spiteball Feb 25 '15 at 14:37
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    The expenses of an ETF are only between the shareholder and the fund manager, the brokerage has no stake in it after the trade. My guess is that the brokerage computer systems are not keeping fully up to date as the funds expense ratios change. – EkoostikMartin Feb 25 '15 at 16:50
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The fee for ETF's is set for all brokers at the same level but there are a few things that can cause confusion when you research an ETF across brokerages. For instance, total expense ratio also includes your trading fee which differs between brokers. So if one broker costs $9.99 per trade and the other $7.99, that will make your total expense ratio differ because those two expenses are different. Some online brokers also offer no fee ETF's. This list is also different for each broker and can also cause a difference in your expense ratio.

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Expense Ratios:

There's a couple of different expressions of expense ratios -- one brokerage could be looking at net expense ratio, gross expense ratio, or total expense ratio.

Difference in the ratios: One of the biggest differences comes down to how much the fund absorbs of its operating cost vs what it is charging investors. (It can waive a portion of its fees). However, these are more common for mutual funds.

Could also be a brokerage update timing issue.

Expense reports article if you want to read more about fee breakdown.

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