Surprise: ETF Fees Are Going Up

3 tools for comparing the costs.


Exchange-traded funds are known for their dirt-cheap annual expenses, but data from Morningstar show that they're getting pricier: The average ETF now charges 0.54 percent in annual fees, up from 0.41 percent a year ago.

That may seem like chump change, but as the Wall Street Journal points out, if you put $10,000 into an ETF with a 0.54 percent expense ratio that earns an annualized 8 percent over 20 years, you'll have $41,826—about $1,100 less than if you had invested in a fund with a 0.41 percent expense ratio (which earned the same return over that period).

Not surprisingly, the more exotic, narrowly focused ETFs are leading the uptick in expenses. You can still buy broad-market ETFs on the cheap: For example, the Vanguard Total Stock Market ETF charges just 0.07 percent annually, and the SPDR S&P 500 ETF charges 0.10 percent. But specialized funds charge more—sometimes a lot more—such as the HealthShares European Medical Products and Devices ETF, which levies a 0.95 percent expense ratio.

The Journal points out a few helpful sites for comparing the costs of ETFs:

• To sort ETFs by expense ratio, check out Morningstar's ETF screener, or try IndexUniverse's screener.

• For a detailed analysis, check out the Financial Industry Regulatory Authority's Mutual Fund Expense Analyzer (it includes ETFs.)

Compare the cost of investing in ETFs versus no-load mutual funds using Rydex Investments' Trading Expense Calculator.