ETFs in Retirement Accounts

Fees have become a hot topic within the exchange traded fund industry. The recent focus on fees and the impact they can have upon investment returns has put exchange traded funds into the spotlight for use in 401(k) plans.

Recent regulation on fee disclosure imparted by the Labor Department has required providers to itemize fees and services for plans. The regulation recently spread into retirement plans, and a movement for fee reduction is gathering steam as investors and advisors try to keep fees to a minimum, reports Darla Mercado for Investment News.

“If small participant accounts are investing in ETFs every two weeks, they could have their investments eaten by commissions if you don’t build the system correctly,” Mr. Schweiss said, noting that TD charges a flat fee instead of a transaction cost. [Fidelity, BlackRock Deal May Speed ETFs in 401(k) Plans]

Fee reduction has been a hot topic in the investment community, as income is harder to come by and yields are still hovering around zero. Passively managed indices such as ETFs have been put into the spotlight as a means for capital preservation within a portfolio.

Advisrors  and ETF advocates have been pushing for ETFs within retirement plans. ETFs have yet to break into 401(k) plans because of structural differences. 401(k) plans have been modeled around mutual funds for years, however, the trading aspect and the transaction fees incurred are the biggest hitch.