At the Inside ETFs conference in January, State Street Global Advisors unveiled its ‘ETF Hidden Cost Hunter’ interactive tool to educate investors about the total cost of ETF ownership.
The tool will soon be available on SSGA’s website for all advisors to use.
It was designed to test the knowledge advisors have about the total cost of ownership by having them identify the five components that make up total costs on a large touch screen (there were a total of 11 ETF related terms floating across the screen).
Scores were based on accuracy and amount of time required to identify all five terms.
Matt Bartolini, SSGA Head of SPDR Americas Research, said if he were grading this test, he would give the conference contestant group a “solid B,” adding that correct answers were selected quite frequently, but 35 percent of choices were incorrect.
“Big picture, while there is always more to learn, ETF education has definitely increased over the years as the product structure adoption rate has increased,” Bartolini said. “This is evident by bid-ask spread being the most selected answer in the game. This is a very ETF-centric topic and 80 percent got it right.”With more education this number could easily be in the 90’s by next year, as more investors adopting ETFs come to realize how important trading costs are when implementing an ETF into a portfolio.”
To use the tool, each contestant had 60 seconds to find and tap the five terms that make up the total cost of ETF ownership.
In addition to displaying a leaderboard for the most knowledgeable participants, SSGA was able to aggregate data on average scores, most clicked ETF cost, least clicked ETF cost, most clicked correct ETF cost and most clicked incorrect ETF cost.