What is a "good" net expense ratio for an ETF?

Asked 3 years ago

What is the average ETF expense ratio annually, and when is the expense ratio considered too high for an ETF to charge? Do they typically have high expense ratios or has it got to do wth how you work with them? How do you calculate the fees? In the very end, would you say ETFs are worth it?

Net expense ratio Etf

Osasere Okunloye

Monday, September 20, 2021

Several factors may affect the expense ratio. These factors include the category or strategy of investment and the size of the fund.  Generally, the smaller the number of assets, the higher the expense ratio. From the part of the investor, a good expense ratio should be around 0.3-0.7%, depending on factors. Anything around 1.5% is considered high.

Andrew Moran

Thursday, September 23, 2021

According to Morningstar Investment Research, the average net expense ratio for the typical exchange-traded fund (ETF) is 0.44%, which means you pay $4.40 in annual fees for every $1,000 you invest.
That said, anything that is below 0.7% is a "good" net expense ratio. If you paying anything more than 1%, you are pouring your money down the drain.
And, yes, ETFs are definitely worth investing in because they will give you diversification, and depending on the security, you will receive a handsome monthly or quarterly dividend. So, for example, if you want to invest in the automobile or energy sectors, you can buy a fund that has multiple stock options rather than having to buy single stocks.