What are your ETFs really costing you?

Europe’s exchange-traded fund (ETF) market is growing healthily as more investors switch to ‘passive’ index-tracking from pricier actively managed funds.

But when you’re comparing the costs of a tracker with an active alternative, remember the ETF doesn’t give the exact index return. It incurs management fees and other costs just like an active fund, leading it to underperform slightly. For a full picture, you have to compare the after-cost return on the ETF with that on a rival product.

By law, any European mutual fund must reveal a measure of recurring annual costs, its ‘ongoing charges’, in its [...]

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