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ETF Specialist

How Inexpensive Can ETFs Get?

In some cases, the fund provider pays you to invest (not including asset performance).

Mentioned: ,

The pricing wars are under way in ETF land, and investors are enjoying all the spoils. At Morningstar, we've done countless studies on the best predictors of future fund returns, and the best indicator, hands down, is fees--the lower, the better.

In recent weeks, we've seen several "me too" vanilla funds hit the market, differentiated only by their slightly lower management fees compared with existing funds. Charles Schwab shook up the landscape as well, offering six extremely low-cost broadly diversified equity funds that can be traded for free on the Schwab platform, and Old Mutual jumped into the ETF fray with a limited-time offer of zero fees on its new emerging-markets fund. (Limited-time offers on long-term strategies don't really seem appealing to me, but that's a different topic entirely).

Paul Justice does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.