Low-Cost ETFs

“Asset managers also cited as a ‘major driver’ of future growth the expectation that advisors would keep migrating to fee-based accounts,” Vanguard added. ” Such financial intermediaries seem to be increasingly directing their clients away from higher-cost funds and individual securities to lower-cost funds and exchange-traded vehicles.”

Low-cost products have attracted a larger following in both index funds, notably index-based ETFs, and actively managed strategies.

“Although performance remains a major focus, a similar shift has taken place among actively managed funds as lower-cost active funds have attracted more assets than their higher-cost counterparts,” Vanguard said.

Over the decade period ended Dec. 31, 2012, about $204 billion went into equity ETFs as investors looked for low-cost alternatives to mutual funds. Additionally, around $152 billion was invested into ETFs with expenses lower than 0.14%.

For more information on ETFs, visit our ETF 101 category.

Max Chen contributed to this article.