ETF Investing: Low Fees vs. Lower Fees

Ulli Uncategorized Contact

MarketWatch had a story on Vanguard’s filing of a new ETF tracking the well known MSCI EAFE Index (Morgan Stanly Capital International Europe, Australia, Far East Index).

The buzz is that it will be a directly competing product with Barclay’s well known iShares MSCI EAFE fund better known as EFA. This ETF has been well liked by many investors, and it has grown in size to some $45 billion.

So what’s the big deal?

For one, as could be expected, Vanguard’s filing stated an annual “expected” expense ratio for the new ETF of only 0.15%. Compare that to iShares EFA of 0.35% and you can see that this has the potential of a real competitive battle.

That doesn’t mean that I will jump right in and buy it. As is my habit in my advisor practice, I’d like to see a few months of price data so that I can track the trend. Nevertheless, this new competing product, with less than 50% of the fees, is a great step in the right direction of benefiting the investing public.

Now, if only mutual fund companies would notice.

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Comments 2

  1. Want to know what the real difference is between a 0.35% expense ratio and a 0.15% expense ratio?

    The sponsorship of a professional golf tournament.

    Anytime a company like Vanguard can take market share away from a corporation with a fat marketing and advertising budget, it’s OK by me.

    And good for the individual investor.


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