Inside The Five Most Expensive ETFs

The rise of the ETF industry is often attributed (in large part at least) to a shift in investor preference from pricey active management to low-cost indexing strategies. ETFs burst on to the investment scene by offering fees equivalent to only a fraction of those charged by traditional actively-managed mutual funds, and have continued to attract assets as investors frustrated with the inability of active management to consistently generate alpha seek out more cost-efficient alternatives.

But not all ETFs offer bargain basement expense ratios. As the product offerings have become increasingly specialized and targeted in recent years, average fees have been on the rise. This trend isn’t necessarily attributable to issuer greed (the low end of the expense ratio range has expanded as well), but rather to increasing complexity and granularity of exposure available through ETFs.

Replicating the S&P 500 is a relatively simple task, but tracking the performance of more complex strategies or far-flung markets often incurs additional costs. There are now a handful of ETFs that have seen expense ratios climb above the 1% mark, venturing into mutual fund territory. Below, we highlight five ETFs that charge an expense ratio of at least 1.0%.