Exchange traded funds (ETFs) have some of the lowest expense ratios in the market. The low costs can be attributed to their passive indexing methodologies, but different indices will create varying cost structures.
At the end of October, State Street Global Advisors switched the underlying benchmark for its Bank ETF to Standard & Poor’s, an equal-weighted index, from Keefe, Bruyette and Woods, a market-cap weighted index, reports Ari I. Weinberg for The Wall Street Journal. Consequently, the re-dubbed SPDR S&P Bank ETF (NYSEArca: KBE) changed its holdings and expense ratio.
Invesco PowerShares recently drafted four new ETFs based on the discarded KBW financial indices, offering zero management fees until February next year in an attempt to carve out its piece of the market share. [Financial ETFs Lead Market Decline with Nearly 5% Loss]
Last week, Russell Investments also reduced fees on 13 volatility, beta and momentum ETFs on the heels of similar actions from rivals, such as Direxion.