One of the founding principles of the ETF industry was cost competitiveness; after being charged upwards of 150 basis points for their favorite mutual funds, investors had grown tired of surrendering a substantial portion of their gains to the managers of big name funds. Now, there are ETFs that charge as low as 5 basis points; on a $1 million dollar investment, that means just $500 annually. Investors can now build an effective portfolio while minimizing their expenses using some of these ultra-efficient funds. But for all of cheap options that the ETF industry offers, it certainly has a fair amount of products on the other side of the equation. Below, we outline the top ten cheapest and most expensive funds for investors looking to better manage their costs [for more, see our ETFdb Cheapskate Portfolio].
The Most Expensive
Given the low costs that many funds offer, some of the fees on this list may come as a shock to investors. But the general rule of thumb is that you are paying more for unique exposure, so in many cases, the funds can be worth their cost.
- Active Bear ETF (HDGE): This actively managed product, from AdvisorShares, takes the cake when it comes to most expensive funds, charging 1.85% for its exposure. However, it should be noted that the fund has performed quite well in these volatile markets [see Low Volatility ETFs Attracting Big Inflows].
- Daily 2x VIX Short-Term ETN (TVIX) / Daily 2x VIX Medium-Term ETN (TVIZ): These ETNs offer a 2X leverage on VIX contracts, making them some of the most volatile funds on the market. Both charge 1.65% but have proven themselves to be effective tools for betting against markets.
- 3x Inverse Silver ETN (DSLV) / 3x Long Silver ETN (USLV): These two funds, which charge 1.60%, offer 3X leveraged on silver futures, allowing investors to make a strong play on the precious metal.
- Meidell Tactical Advantage ETF (MATH): Launched midway through 2011, this active product also charges fees of 1.60%. The fund’s high fees are, in part, due to the fact this this is an ETF comprised of ETFs.
- WTI Crude Oil Fund (CRUD): This Teucrium product, which charges 1.58%, features a strategy that invests in a number of crude oil futures in an effort to alleviate contango. It should be noted that this is an “all in”expense figure; other commodity products count commissions and other costs elsewhere. So CRUD is actually competitive with the other oil ETFs out there in terms of total fees.
- Accuvest Global Long Short ETF (AGLS): Another active product from AdvisorShares, AGLS is home to fees of 1.50%. The high expenses come from the expenses associated with maintaining both long and short exposure within the fund.
- Natural Gas Fund (NAGS): Another Teucrium fund, NAGS hit the market in early 2011, charging 1.50% for investment. Unlike most other natural gas products, NAGS is specifically designed to nix contango and make for a more effective trading tool.
- Dent Tactical ETF (DENT): AdvisorShares makes its third appearance on the list with DENT, charging 1.50% for investors. The active product has been around since late 2009 but has just $13.3 million in assets.
- Corn Fund (CORN): The third fund from Teucrium to make this list, CORN charges 1.49%. Despite its high fees, the fund has over $74 million in assets and is just a year and a half old.
- Market Vectors CEF Municipal Income ETF (XMPT): One of the younger options on the list, this CEF-based fund hit the market in July of this year. The ETF charges 1.43% for its investment in closed-ended securities.
There are some real eye-openers on the list of least expensive funds. Note that we omitted four ETFs (KBWI, KBWR, KBWB, KBWC) because their current fee structure of 0.00% will expire in February of next year and the products will then charge 0.35%.
- Focus Morningstar US Market Index ETF (FMU): Hitting the market early this year, FMU broke new ground by charging just 0.05% for exposure to all cap equities in the U.S.
- Focus Morningstar Large Cap Index ETF (FLG): The second FocusShares product to make the list, FLG seeks to compete with SPY and VOO with its exposure to large cap U.S. equities. The fund also charges 0.05%.
- S&P 500 ETF (VOO): Speaking of VOO, that product takes the third place ranking with its fees of 0.06% and assets of $2.1 billion, despite being just barely over one year old.
- U.S. Broad Market ETF (SCHB): This Charles Schwab fund offers broad exposure to the Dow Jones Industrial Average while charging 0.06%.
- Total Stock Market ETF (VTI): So emerges Vanguard’s trend of offering some of the least expensive products in the space. VTI offers exposure to the broad U.S. market while charging just 0.07%.
- U.S. Large-Cap ETF (SCHX): This fund represents the largest 750 stocks of U.S. equities while charging just 0.08%. In its two years on the market, this fund has already amassed $692 million in assets.
- 1-3 Year US Treasury Index Fund (TUZ): This marks the first fixed income product to break into the top ten, as TUZ charges just 0.09%. Despite being backed by PIMCO, the fund has just $138 million in assets.
- SPDR S&P 500 (SPY): All hail the ETF king. With fees of just 0.09%, SPY is home to over $85 billion in assets, making it one of the largest funds in the world.
- S&P 500 Index Fund (IVV): iShares’ S&P 500 ETF also charges 0.09% and features assets that top the $25 billion mark.
- U.S. Aggregate Bond ETF (SCHZ): The final fund on this list tracks the performance of U.S. investment grade bonds. The fund charges just 0.10% in expenses and has amassed over $154 million in assets since launching in July of this year.
Disclosure: No positions at time of writing.
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