ETF Fees Are Trending Lower

According to the Wall Street Journal the management fees being charged on ETFs are coming down.  "Charles Schwab has cut fees on more than a dozen ETFs, according to new prospectuses filed Thursday with the Securities and Exchange Commission.   The fee cuts come a little more than a week after BlackRock CEO Laurence Fink said at a financial-services conference that his firm would lower the fees of its own iShares ETFs to better compete with Vanguard Group, whose ETFs have rapidly accumulated assets at the expense of some iShares products." 

According to the Journal article {which you can link here } most Schwab ETFs will now charge under 10 basis points.  Vanguard's fees range around 20 basis points.  Price is not the only factor when deciding which ETF to buy.  However, in an era where according to Forbes the real cost of owning a mutual fund ranges higher than 3% in a non-taxable account and higher than 4% in a taxable account*, it is difficult for me to see why investors continue to keep their money in mutual funds.

*Forbes.com The Real Cost of Owning a Mutual Fund.

**Please note that Charles Schwab is the custodian for many of our client accounts.  We do not currently invest in the Schwab family of ETFs.