The Obsession With Low Expense Ratio ETFs

By Todd Rosenbluth, CFRA

During a video with CFRA taped at Inside ETFs, Bloomberg Intelligence’s Eric Balchunas explained that investors are saving a ton of money with “eating your vegetables” type products. He added that advisors are obsessed with the cheapest products, which will continue to drive fees lower.

In rating more than 1,300 ETFs, CFRA combines holdings-level analysis with fund-level attributes, including expense ratio and trading costs. CFRA thinks an ETF’s future return is not driven by past performance success or its expense ratio. To watch this video and others conducted by CFRA at Inside ETFs, visit https://newpublic.cfraresearch.com/etf-videos/.

The asset base for SPDR Portfolio Emerging Markets ETF nearly doubled to $1.6 billion, aided by more than $900 million of net inflows since its expense ratio decreased to 0.11%, from 0.59%, and it was added to a commission free platform. Meanwhile, iShares Core MSCI Emerging Markets and Vanguard FTSE Emerging Markets ETF, which both charge 0.14%, gathered $6.4 billion and $880 million, respectively, in this period. Schwab Emerging Markets Equity gathered $600 million and has a 0.13% expense ratio.

IEMG and SCHE can be purchased commission free on different self-directed platforms than the one SPEM is now found on.