After a decade of fee-cutting wars, ETF issuers may continue to raise fees

  • ETF issuers raised their fees in 2023, defying investor expectations
  • This marks a reversal of the decade-long trend of fee-cutting wars
  • The shift towards active investment strategies and mutual-fund-to-ETF conversions are driving up fees
  • Investors are favoring funds that cut costs, but switching fees may deter them
  • The trend of surging ETF fees is expected to continue in the next few years

ETF issuers surprised investors in 2023 by raising their fees, going against the decade-long trend of fee-cutting wars. This shift comes as the industry evolves beyond cheap index-tracking funds. The increase in fees can be attributed to the growing popularity of active investment strategies and mutual-fund-to-ETF conversions. While investors still prefer cheaper offerings, the costs of switching funds may deter them from doing so. Additionally, ETF providers with niche market positions have pricing power and flexibility with their fees. Experts predict that the trend of surging ETF fees will continue in the next few years, driven by the adoption of actively-managed and alternative ETFs that charge higher fees. Overall, this marks a significant change in the ETF landscape and has implications for investors who seek cost-effective options.

Public Companies: First Trust (null), Fidelity (null), Dimensional (null), VanEck (null), Nuveen (null), T. Rowe Price (null), iShares (null), Amplify (null), PIMCO (null), American Beacon Advisors (null), Direxion (null), Morgan Stanley (null)
Private Companies:
Key People: Isabel Wang (MarketWatch reporter), Christine Idzelis (MarketWatch reporter), Zachary Evens (Manager Research Analyst at MorningStar Research Services), Elisabeth Kashner (Director of ETF Research and Analytics at FactSet), Paul Baiocchi (Chief ETF Strategist at SS&C ALPS Advisors)

Factuality Level: 7
Justification: The article provides information about the increase in ETF fees and the reasons behind it, including the shift towards active investment strategies and mutual fund conversions. It includes data from MorningStar and FactSet to support its claims. However, the article could provide more context and analysis on the impact of these fee hikes on investors and the overall ETF industry.

Noise Level: 3
Justification: The article provides relevant information about the increase in ETF fees and the reasons behind it. It includes data and quotes from experts to support its claims. However, there is some filler content at the beginning and end of the article, such as the introduction and the list of top and bottom-performing ETFs.

Financial Relevance: Yes
Financial Markets Impacted: ETF issuers and fund managers

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the increase in fees by ETF issuers and fund managers, which is relevant to financial markets. However, there is no mention of any extreme events.

Reported publicly: www.marketwatch.com