Question asked during Adult Ed Investment class tonight.
Question was why are ETF annual expenses lower than mutual fund expenses, even indexed funds.
"Lower costs
Expenses can have a significant impact on returns for investors. ETFs, in general, have significantly lower annual expense ratios than other investment products. ETFs are less likely to experience high management fees because they are index-based, not “actively” managed. And, since they trade on an exchange, ETFs are insulated from the costs of having to buy and sell securities to accommodate shareholder purchases and redemptions".
Expenses can have a significant impact on returns for investors. ETFs, in general, have significantly lower annual expense ratios than other investment products. ETFs are less likely to experience high management fees because they are index-based, not “actively” managed. And, since they trade on an exchange, ETFs are insulated from the costs of having to buy and sell securities to accommodate shareholder purchases and redemptions".
I took the above excerpt from the articles on my website. You might want to read all the articles since they are fairly comprehensive.
here is the page which has 4 articles on it so scroll down:
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