Relentless investor zeal for fee savings in exchange-traded funds is beginning to sow a set of new challenges for managers of actively managed and environmental, social and governance ETFs.
By the end of 2019, the asset-weighted average annual expense ratio for overall U.S.-listed ETFs was 0.2% compared to 0.23% two years earlier, according to a blog post on the website of FactSet.
ETF expense ratios for equity and fixed-income funds dropped even more: each dropped to 0.18% from 0.21% two years ago.
The three managers with the largest flows in 2019 were BlackRock (iShares), Charles Schwab and Vanguard Group, and ended the year with asset-weighted ETF expense ratios of 0.2%, 0.08% and 0.06%, respectively. According to the blog post, other ETF issuers have adapted to the low-fee environment by offering specialized products at a higher price, but competition inevitably creates more "fee wars."