economy

January 2, 2026

Some ETFs compete on price

While exchange-traded funds with lower fees let you keep more investment gains, cost may not always be the most important factor to consider, experts say.

Some ETFs compete on price

TL;DR

  • ETFs offer lower costs, tax efficiency, and intraday tradability compared to mutual funds.
  • The average expense ratio for passively managed ETFs is 0.14%, while for actively managed ETFs it's 0.44%.
  • Costs eat into gains, significantly impacting long-term asset growth.
  • Mixing ETFs from different providers can lead to over- or underweighting certain stocks and sectors, deviating from desired risk/return exposure.
  • Investors are generally advised to stick with a single ETF provider to maintain consistent index tracking.
  • Liquidity is important; look for narrow bid-ask spreads and high average daily trading volume.
  • Actively managed ETFs may outperform passively managed ones, justifying a higher expense ratio, especially in volatile markets.

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