ETF investors should be aware that ownership of these vehicles involves costs that extend well beyond brokerage commissions when shares are bought and sold.We screened ETFs in TheStreet.com Ratings database and identified three "super-cost-efficient" funds, as well as others that should appeal to the cost-conscious investor. In addition to the expense ratios levied by the ETF management firms, investor returns are impacted by the bid/asked spreads, as well as by discounts and premiums of market price vs. net asset value per share when shares are bought and sold. Even minor bloat in these often-overlooked expenses shouldn't be tolerated, as small differences in percentage returns, over time, can compound into major differences in investment values. TheStreet.com Ratings database was screened for ETFs meeting these criteria:
|NAME, TICKER & TheStreet.com RATINGS GRADE||AVG. DAILY VOLUME (1)||AVG PREM./ DISC. (%) (2)||ANN'L EXPENSE RATIO (%)||BID/ASK SPREAD (3)||12-MO. TOTAL RET'N (%) (4)|
|THREE SUPER-COST-EFFICIENT ETFs|
|iShares Lehman 1-3Yr Treasury Bond Fd (SHY) B||1,049,300||0.10||0.15||0.01||8.95|
|iShares Russell 1000 Index Fd (IWB) C+||2,079,250||0.07||0.15||0.01||-2.69|
|SPDR S&P 500 ETF (SPY) C+||227,572,100||0.04||0.10||0.01||-2.66|
|OTHER COST-EFFICIENT ETFs|
|Consumer Discretionary Sel Sector SPDR (XLY) D+||5,335,500||-0.01||0.23||0.01||-16.36|
|Consumer Staples Sel Sector SPDR Fd (XLP) B||3,930,550||0.10||0.23||0.01||4.32|
|DIAMONDS Trust (DIA) B||16,723,250||0.06||0.18||0.02||1.97|
|Financial Sel Sector SPDR Fd (XLF) C-||110,863,550||-0.05||0.23||0.01||-19.33|
|Health Care Sel Sector SPDR Fd (XLV) C+||3,673,750||0.08||0.23||0.01||-0.74|
|Industrial Sel Sector SPDR Fd (XLI) B+||6,648,750||-0.04||0.23||0.01||5.04|
|iShares Lehman 20+Yr Treasury Bond Fd (TLT) B||2,494,000||0.14||0.15||0.02||13.74|
|iShares Russell 1000 Growth Index Fd (IWF) C+||4,292,950||-0.09||0.20||0.01||0.06|
|iShares Russell 1000 Value Index Fd (IWD) B||3,268,550||-0.16||0.20||0.01||-5.82|
|iShares Russell 2000 Growth Index Fd (IWO) C-||4,353,850||0.00||0.25||0.02||-4.88|
|iShares Russell 2000 Index Fd (IWM) D||94,948,600||0.15||0.20||0.01||-9.72|
|iShares Russell 2000 Value Index Fd (IWN) D||3,723,300||0.09||0.25||0.02||-14.99|
|iShares S&P 100 Index Fd (OEF) C+||2,436,100||0.06||0.20||0.02||-0.59|
|iShares S&P 500 Growth Index Fd (IVW) C+||1,135,850||-0.04||0.18||0.02||-1.78|
|iShares S&P 500 Index Fd (IVV) B-||3,031,150||0.03||0.09||0.02||-2.70|
|iShares S&P Mid Cap 400 Index Fd (IJH) C||506,300||0.03||0.20||0.02||-2.46|
|iShares S&P Small Cap 600 Index Fd (IJR) D+||1,780,750||0.09||0.20||0.02||-7.70|
|Materials Sel Sector SPDR Fd (XLB) B+||11,515,850||-0.08||0.23||0.01||12.39|
|PowerShares QQQ (QQQQ) C-||170,508,900||0.09||0.20||0.01||2.70|
|Technology Sel Sector SPDR Fd (XLK) C||3,755,250||0.03||0.23||0.01||-1.30|
|Utilities Sel Sector SPDR Fd (XLU) A+||6,567,500||0.17||0.23||0.01||10.12|
|(1) Average daily trading volume for Dec. 2007 - Jan. 2008. |
(2) Average premium or discount of market price to net asset value during Jan. 2008.
(3) Spread between bid & asked during trading on Feb. 22, 2008.
(4) For 12 months ended Jan. 31, 2008.
Sources: TheStreet.com Ratings & Bloomberg.