One of the founding principles of the ETF industry was cost competitiveness; after being charged upwards of 150 basis points for their favorite mutual funds, investors had grown tired of surrendering a substantial portion of their gains to the managers of big name funds. Now, there are ETFs that charge as low as 5 basis points; on a $1 million dollar investment, that means just $500 annually. Investors can now build an effective portfolio while minimizing their expenses using some of these ultra-efficient funds. But for all of the cheap options that the ETF industry offers, it certainly has a fair amount of products on the other side of the equation. Below, we outline the top ten cheapest and most expensive funds for investors looking to better manage their costs [for more, see our ETFdb Cheapskate Portfolio].
The Most Expensive
Given the low costs that many funds offer, some of the fees on this list may come as a shock to investors. But the general rule of thumb is that you are paying more for unique exposure, so in many cases, the funds can be worth their cost [for more ETF news and analysis subscribe to our free newsletter].
- Teucrium Sugar Fund (CANE): Recently overtaking first place, the dynamic sugar product now charges 2.32% for investment.
- STAR Global Buy-Write ETF (VEGA): Debuting in 2012, this unique product comes with an expense ratio of 2.01%.
- Active Bear ETF (HDGE): This actively managed product, from AdvisorShares, takes the cake when it comes to most expensive funds, charging 1.85% for its exposure. However, it should be noted that the fund has performed quite well in these volatile markets [see Low Volatility ETFs Attracting Big Inflows].
- Global Echo ETF (GIVE): Another actively-managed fund, GIVE launched in May of 2012 and charges 1.70% for investment.
- Daily 2x VIX Short-Term ETN (TVIX) / Daily 2x VIX Medium-Term ETN (TVIZ): These ETNs offer a 2X leverage on VIX contracts, making them some of the most volatile funds on the market. Both charge 1.65% but have proven themselves to be effective tools for betting against markets.
- 3x Inverse Silver ETN (DSLV) / 3x Long Silver ETN (USLV): These two funds, which charge 1.60%, offer 3X leveraged on silver futures, allowing investors to make a strong play on the precious metal.
- 3x Long Natural Gas ETN (UGAZ) / 3x Inverse Natural Gas ETN (DGAZ): These natural gas funds rolled out in 2012 to healthy volumes, despite charging 1.65% a piece.
- QAM Equity Hedge ETF (QEH): This active hedge fund product launched in August of 2012 from AdvisorShares and charges 1.64%.
- Meidell Tactical Advantage ETF (MATH): Launched midway through 2011, this active product also charges fees of 1.60%. The fund’s high fees are, in part, due to the fact this this is an ETF comprised of ETFs.
- Accuvest Global Long Short ETF (AGLS): Another active product from AdvisorShares, AGLS is home to fees of 1.50%. The high expenses come from the expenses associated with maintaining both long and short exposure within the fund.
There are some real eye-openers on the list of least expensive funds. Note that we omitted four ETFs (KBWI, KBWR, KBWB, KBWC) because their current fee structure of 0.00% will expire in February of next year and the products will then charge 0.35% [see also Seven Simple & Cheap ETF Model Portfolios].
- U.S. Large-Cap ETF (SCHX): Tied for the cheapest ETF in the world, this fund offers exposure to the largest 750 U.S. securities while charging just 0.04%.
- U.S. Broad Market ETF (SCHB): Now charging just 0.04%, this fund grants access to the 2,500 largest stocks listed on U.S. exchanges.
- U.S. Aggregate Bond ETF (SCHZ): This Schwab fund tracks U.S. investment grade bonds. The fund charges just 0.05% in expenses and has amassed over $154 million in assets since launching in July of this year.
- S&P 500 ETF (VOO): VOO takes the third place ranking with its fees of 0.05% and assets of $5.7 billion through its first two years in existence.
- Total Stock Market ETF (VTI): So emerges Vanguard’s trend of offering some of the least expensive products in the space. VTI offers exposure to the broad U.S. market while charging just 0.06%.
- US Dividend Equity ETF (SCHD): Schwab continues its domination of the cheapest products with SCHD, which selects dividend payers from the Dow Jones U.S. Broad Market Index while charging just 0.07%.
- U.S. Mid-Cap ETF (SCHM): Charging 0.07%, this mid-cap product invests in the securities ranked 501-1000 by market cap from the U.S. Total Stock Market.
- U.S. Large-Cap Growth ETF (SCHG): The large-cap growth fund from Schwab charges just 0.07%.
- U.S. REIT ETF (SCHH): Charging just 0.07%, this product offers exposure to REITs domiciled within U.S. borders.
- U.S. Large-Cap Value ETF (SCHV): Rounding out the list with expenses of 0.07%, this large cap value product has more than $400 million in total assets.
Disclosure: No positions at time of writing.