Many times the expense ratio takes the blame for cutting into or affecting total returns of an exchange traded fund (ETF).  One analyst confirms that the total degree of outperformance is a much larger factor.

Apparently, the degree of outperformance in many cases is a much larger component of total returns than the expense ratio is for ETFs. Paul Amery for Index Universe explains that outperformance can account for the total return and capital made on an ETF investment. [Causes of ETF Tracking Error.]

In a recent study, Amery compared ETFs that seek to replicate the Euro Stoxx 50 over a 20-month period. The index actually outperformed all of the others by far. A lot of this is dividend-tax jurisdiction shopping: funds will domicile themselves in countries with low dividend taxes, and/or lend out stocks over the dividend date to other funds in low-tax countries, says Amery.

There are many other contributing factors that can be insightful as to why the iShares Euro Stoxx (NYSEArca: FEZ) and index outdid the others. Amery says it’s tough to know what conclusions to reach regarding specifically why some funds do better than others; to find detailed answers would mean digging through a lot of complicated information that isn’t always available. [ETFs For Eurozone Growth.]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.