What is a high expense ratio for an ETF


#1

I want to build a personalised portfolio…

Does anyone know the reasonable price for an ETF?


How do you calculate the annual management charge calculation? (ETFs, Index Funds, Mutual Funds)
#2

Asking the proper price for an ETF, is similar to the question how long is a piece of string…

I think a good question is…what are you paying for…

If the ETF offers an opportunity which is difficult to offer (e.g. farmland REIT), it will be more expensive (1%+)

If the ETF tracks a well-known index, then a 1% charge will be outrageously expensive because index funds usually offer the same services at a far cheaper rate

For me personally…

• If the fund does not offer something exceptional and it does not always beat the market… anything over .65% is expensive.

• If the fund offers a very unique opportunity, into an asset class which is not often securitised (water infrastructure)… anything over 1.5% would be expensive

Side note: look for hidden charges such as…

• Trading charges
• Performance fees
• Mutual fund fees if you have a fund manager…

Often times, a fund with 1% annual fee has many hidden charges…

Good luck!


#3

Agree with everything said above…

If you want to see how much you are paying, google:

“Calculate the hidden cost of fund fees ft”

You will be able to find an excellent fees calculator on the Financial Times website.

Would highly recommend!


#4

I will also ad that Morning Star calculated that the average ETF expense ratio in 2016 was .6%, which compares with .73% for index mutual funds and then 1.45% for actively managed funds as well!

link: https://www.fidelity.com/learning-center/investment-products/etf/etfs-cost-comparison