Understanding ETFs

Case studies in the cost of ETF ownership

July 13, 2023

An illustration shows that for shorter holding periods the most important variables related to ETF costs of ownership are, in descending order of importance: spread, stability of premiums and discounts, and the expense ratio. However, for longer holding periods, expense ratio becomes most important, followed by spread and the stability of premiums and discounts.
A line graph shows the total cost of ownership for two ETFs, SPY and VOO, over periods of up to one year. The point at which VOO becomes lower cost than SPY is 26 calendar days.
A line graph shows the total cost of ownership for two ETFs, SPY and VOO, over periods of up to one year. The point at which VOO becomes lower cost than SPY is 26 calendar days.
A line graph shows the total cost of ownership for two ETFs, VGSH and SHY, over periods of up to one year. The point at which VGSH becomes lower cost than SHY is 17 calendar days.
A line graph shows the total cost of ownership for two ETFs, VGSH and SHY, over periods of up to one year. The point at which VGSH becomes lower cost than SHY is 17 calendar days.

Contributors

David Sharp
Patrick Hooper

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