From the July 2006 issue of Research Magazine • Subscribe!

July 1, 2006

Ratios Continue to Fall in Q2

Low expenses have been driving the popularity of ETFs, and investors haven't been disappointed. Across all categories, ETF expense ratios were consistently lower in the second quarter than the averages of the corresponding mutual and closed-end funds.

The ETF asset category with the lowest average expense ratio was fixed income at 0.17 percent. With only six ETFs, this category is also one of the smallest.

On the other hand, since the beginning of 2005, the number of sector ETFs has soared to 78, from under 50, while the expense ratio average of this group declined from 0.46 percent to 0.44 percent.

Barclays Global Investors (iShares) recently announced a reduction of expenses on 25 sector ETFs from 0.60 percent to 0.48 percent. Among the funds affected by the changes are those tracking Dow Jones, Goldman Sachs and the S&P global industry sectors.

The Vanguard VIPERs had the lowest expense ratios of any ETF family in the second quarter. Equity funds leading the way were the Large Cap VIPERs (0.07 percent), Total Stock Market VIPERs (0.07 percent), and Extended Market VIPERs (0.08 percent).

In the natural resources category, the iShares Silver Trust (SLV) and the United States Oil Fund (USO) both debuted. Each of these funds has an expense ratio of 0.50 percent.

RON DELEGGE is editor of www.etfguide.com

Reprints Discuss this story
This is where the comments go.