“By contrast, a competent ETF asset manager can compile four well-thought-out, age-based portfolios, diversified across an array of asset classes, at a blended cost of about 0.30%,” Arthur added. “That manager might opt to charge a management fee in the range of 0.50%. Together, the all-in cost would amount to 80 basis points, or $80 for each $10,000 invested.”
The ETF Strategist select a group of ETFs to match age-based risk profiles, potentially offering ETF managed portfolios for the young worker, middle-aged investor or those about to retire. [ETF Asset Managers Offer Up Their Own Unique Recipes]
Alternatively, an employer may opt to replace active mutual funds in a 401(k) for ETFs, but investors would have to pick and choose which ETFs would fit their investment horizon.
For more information on 401(k)s, visit our 401(k) category.
Max Chen contributed to this article.