As Jason Zweig explains, ETFs are cheap, but they aren’t cheap enough. Exchange-traded funds have made owning swaths of stocks and bonds remarkably affordable. But if you move even slightly away from the broadest indexes like the S&P 500 or the aggregate U.S. bond market, ETFs often cost more than they should. Funds that mimic a large-company index can cost next to nothing: BlackRock’s iShares, Schwab, State Street and Vanguard all offer such ETFs with annual fees of 0.03% or less. Yet index-tracking ETFs that charge at least 0.20% to invest in large U.S. stocks held $417 billion as of the end of September, according to Morningstar. Thanks largely to inertia or inattention, investors are paying tens of millions of dollars a year in excess fees.
[EOP]
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