From the October 2008 issue of Research Magazine • Subscribe!

October 1, 2008

Expenses Steady in Q2

During the second quarter, the expense ratios in most exchange-traded fund (ETF) and exchange-traded note (ETN) asset categories increased modestly or remained the same from the first quarter, according to data provided by ETFguide.com.

The industry and sector group had 175 equity funds, making it the largest ETF category. The median expense ratio of this group increased by 8 basis points to 0.58 percent.

State Street Global Advisors added 10 international industry sector equity funds to its lineup. The ETFs track S&P indices and charge annual expenses of 0.50 percent.

The number of bond ETFs began 2007 at 14 and has since risen to 62 funds. The median expense ratio for all bond ETFs stayed level at 0.20 percent.

Influxes of ETFs targeting frontier markets, the tiniest of emerging market countries, were recently introduced. Among the new entrants are the Africa Index ETF (AFK), PowerShares Frontier Portfolio (PMNA), and the WisdomTree Middle East Dividend Fund (GULF).

Many recently launched ETFs have been introduced with fee waivers that temporarily reduce expense ratios for a specified period of time, usually one to two years. Fund families will typically retain the right to adjust investment costs if certain asset thresholds are reached.

ETFguide.com's expense ratio data includes the broad universe of ETFs and ETNs. Merrill Lynch's HOLDRs were omitted because their cost is not expressed in terms of expense ratios.

---

Ron DeLegge is the San Diego-based editor of www.etfguide.com.

Reprints Discuss this story
This is where the comments go.