Are corporate bond ETFs pricing themselves out of the market?

Many believe passive investing automatically means cheaper products, but certain active bond funds offer price parity with the wrapper, damaging their unique selling point

Theo Andrew


ETFs often have a reputation for low fees and ease of use, however, this is not always the case.

The cost of an ETF is often heralded as the key differentiator compared to active mutual funds, and while not the only factor, certain areas of the fixed income market’s total expense ratios (TERs) are sometimes closer than clients may anticipate.

This is often true in high yield and other esoteric areas of fixed income. Despite total expense ratios (TERs) ranging from 0.20% to 0.60% for certain exposures, the cost of a global high yield ETF will generally cost around 40-50 basis points...

This article first appeared in ETF Insider, ETF Stream's monthly ETF magazine for professional investors in Europe. To read the full article, click here.