The average ETF expense ratio is about 0.6%, compared with roughly 1.4% for actively managed mutual funds. However, some active funds also layer on additional distribution fees that further cut into investors’ bottom line.
Of course, expense ratios vary within the ETF business. Broad-based index ETFs have rock-bottom fees. Meanwhile, ETFs that use more complex strategies or track obscure sectors are more expensive.
“As a commission, what we’re trying to do is understand … what are [the payments]for, what are the services being provided, what’s the level of oversight of those arrangements by the board?” Bowden said, according to an InvestmentNews report. “What is going on in the industry today?”
The information will be collected by the SEC over the next several months and used to evaluate current distribution fee rules, according to the story.
