18 votes

Why is the expense ratio of an index fund sometimes higher than its equivalent ETF?

Because funds of different share classes are there to cater different account sizes. The actual equivalent of VTI is Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) if account size is &...
base64's user avatar
  • 10.2k
13 votes

Should we really be looking at the expense ratio while choosing funds?

Past performance accounts for the expense ratio, but is (proverbially) not indicative of future results. In particular, going by past performance and choosing a fund that has recently beaten the ...
nanoman's user avatar
  • 29.4k
12 votes

How does a fund's expense ratio work?

Suppose a fund has an expense ratio of 0.055%, as I understand it that means $55 per $1000. If the expense ratio is stated as 0.055% that is actually around 5 hundredths of 1% of the total amount ...
mhoran_psprep's user avatar
10 votes
Accepted

High expense ratio funds - are they worth it?

Over the past five years, QFVOX has returned 13.67%, compared to the index fund SPY that has returned 50.39%. SEVAX has lost 23.96%. AKREX has returned 81.82%. In two of your three examples, you would ...
chili555's user avatar
  • 1,657
10 votes

Why is the expense ratio of an index fund sometimes higher than its equivalent ETF?

Adding onto base64's excellent answer, an ETF also avoids some of the liquidity costs incurred by open end funds. Since only authorized participants may trade shares directly with a fund, and only in ...
Matthew Vandergrift's user avatar
9 votes

High expense ratio funds - are they worth it?

In almost every circumstance high expense ratios are a bad idea. I would say every circumstance, but I don't want backlash from anyone. There are many other investment companies out there that offer ...
DukeLuke's user avatar
  • 745
8 votes

How does one stock fund's charge of 1% more in operating expenses than another fund lower expected returns by 10%?

The 10% refers to the change in return, not the the change in principal. Case 1: you invest $1000 with a 0% TER and 10% return. That means your return is $100. Your balance would be $1100. Case 2: ...
amon's user avatar
  • 2,447
8 votes

Should we really be looking at the expense ratio while choosing funds?

Yes. While the expense ratio is deducted from the NAV, it is still relevant. Imagine you have two index funds tracking the same index. One with 0.1% and the other with 1% TER. Obviously the cheaper ...
Manziel's user avatar
  • 7,422
7 votes
Accepted

Is there any reason to choose my bank's index fund over Vanguard?

That expense ratio on the bank fund is criminally high. Use the Vanguard one, they have really low expenses.
zeta-band's user avatar
  • 3,997
6 votes

Pay index fund expense ratios with cash instead of fund balance

In many cases the expenses are not pulled out on a specific day, so this wouldn't work. On the other hand some funds do charge an annual or quarterly fee if your investment in the fund is larger than ...
mhoran_psprep's user avatar
5 votes

Why does the iShares EEM ETF have a higher expense ratio than similar ETFs like VWO?

Answer from Phillip is correct. I want to add that there are total 807 million shares outstanding fr EEM and turn over is 16% or Average Volume is 66 millions shares per day. So each EEM is changing ...
riya's user avatar
  • 1,245
5 votes
Accepted

When a stock is replaced in an index, does the ETF incur a net loss?

The NAV of an ETF changes because of the share price of its components. It's actual price increases or decreases because buying or selling of ETF shares in the marketplace. If a stock is removed ...
Bob Baerker's user avatar
  • 75.8k
5 votes

Pay index fund expense ratios with cash instead of fund balance

It seems at most a cosmetic difference - nothing keeps you from adding the 9$ cash to the fund the same day the fees are deducted from the shares.
Aganju's user avatar
  • 37.6k
4 votes

Pay index fund expense ratios with cash instead of fund balance

Simply put, that's not allowed. Outside a retirement fund, they simply do not provide a mechanism to pay that expense ratio separately. Ergo, any effort to pay that expense ratio would be ...
Harper - Reinstate Monica's user avatar
4 votes
Accepted

How to compute real return including expense ratio

Returns reported by mutual funds to shareholders, google, etc. are computed after all the funds' costs, including The expense ratio The 12b-1 fee, if any The transactions costs of the fund, which are ...
farnsy's user avatar
  • 15.1k
4 votes

How does one stock fund's charge of 1% more in operating expenses than another fund lower expected returns by 10%?

On a $100 investment, a 10% return is $10. A 1% fee is $100 * .01 = $1 $1 of the $10 is 10% There are times we talk about a 4% safe withdrawal rate in retirement. And people ask about paying a pro ...
JTP - Apologise to Monica's user avatar
4 votes
Accepted

How do expense ratios work for etfs without dividends?

The expense ratio an ETF charges is simply deducted from the assets it holds. This reduces the net asset value which, by market forces and the redemption mechanism, drives the market value of ETF ...
user71659's user avatar
  • 3,272
4 votes
Accepted

Are index fund expense ratios "priced in"?

To paraphrase the late great John Bogle, there are only two "free lunches" or "pure wins" in investing: One is diversification and the other is minimizing investment costs (fees). You really do come ...
nanoman's user avatar
  • 29.4k
4 votes

How does a fund's expense ratio work?

An example explanation ... https://www.morningstar.com/invglossary/expense_ratio.aspx I believe they: the fund has "one big bank account" with all the/any cash and obviously "one big ...
Fattie's user avatar
  • 13.8k
4 votes

Should we really be looking at the expense ratio while choosing funds?

Lowering the expense ratio, according to my understanding, only matters when we have another fund with a similar distribution of holdings, and has a lower expense ratio which yields a higher return. ...
RonJohn's user avatar
  • 50.6k
3 votes
Accepted

Why does the iShares EEM ETF have a higher expense ratio than similar ETFs like VWO?

This is a product of a few factors: EEM is very liquid, while it has just under half the assets under management of VWO (35b vs 65b) it has a daily volume nearly 5x higher than VWO (2.5bn vs ~500m) ...
Philip's user avatar
  • 5,768
3 votes

Do low cost ETFs or mutual funds really do well for an investor?

Here is a DRIP calculator that allows you to compare the performance of ETFs and stocks with and without dividend reinvestment. You have to do them one at a time: https://www.dividendchannel.com/...
Bob Baerker's user avatar
  • 75.8k
3 votes

How much are fees on ETFs on Robinhood? Where are they shown?

Think of an ETF company like any other company, they have employees and offer some good/service to the consuming public. The service is managing the ETF(s) and they charge a fee for that service to ...
Hart CO's user avatar
  • 69.1k
3 votes

How much are fees on ETFs on Robinhood? Where are they shown?

When you're looking at the expense ratio of a fund, that "expense" is not from the broker but from the fund itself. Meaning if the value of the constituents of the fund rises 10% in one year ...
D Stanley's user avatar
  • 131k
2 votes

How do I find an ETF that is similar in investment goals to a given Mutual Fund?

ETF's and index funds (and most mutual funds) track specifically defined benchmark indexes. The most precise way to compare mutual funds, index funds, and ETF's is to compare with other funds that ...
farnsy's user avatar
  • 15.1k
2 votes

Does a low expense ratio off-set a transaction fee? Or is it better to go with a high-ratio mutual fund without a transaction fee?

The question is valid, you just need to work backwards. After how much money-time will the lower expense offset the one time fee? Lower expenses will win given the right sum of money and right ...
JTP - Apologise to Monica's user avatar
2 votes

Is there any reason to choose my bank's index fund over Vanguard?

Extortionate expense ratio aside, comparing the fund to the vanguard balanced fund (with an expense ratio of 0.19%) shows that your bank's fund has underperformed in literally every shown time period. ...
Koen vd H's user avatar
  • 731
2 votes

What is cheaper annually -- buying shares in a Vanguard index fund or buying shares of an ETF?

There are many factors to consider. Vanguard offers Admiral shares of their S&P 500 VFIAX with a minimum investment of $10000 which has a .05% expense ratio, or you can buy VOO, an ETF with a ....
NL - Apologize to Monica's user avatar
2 votes

Is there any reason to choose my bank's index fund over Vanguard?

Your bank's fund is not an index fund. From your link: To provide a balanced portfolio of primarily Canadian securities that produce income and capital appreciation by investing primarily in ...
quid's user avatar
  • 49k
2 votes

Why does the iShares EEM ETF have a higher expense ratio than similar ETFs like VWO?

Sorry I misread the question, updated my answers below. Benchmarks EEM(iShares): follows MSCI index. VWO (Vangaurd): follows FTSE EM all cap index A comparison table for easy reference: https:...
Thinkerer's user avatar
  • 129

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