Low expenses have been driving the popularity of ETFs, and investors haven't been disappointed. Across all categories, ETF expense ratios were consistently lower in the second quarter than the averages of the corresponding mutual and closed-end funds.
The ETF asset category with the lowest average expense ratio was fixed income at 0.17 percent. With only six ETFs, this category is also one of the smallest.
On the other hand, since the beginning of 2005, the number of sector ETFs has soared to 78, from under 50, while the expense ratio average of this group declined from 0.46 percent to 0.44 percent.
Barclays Global Investors (iShares) recently announced a reduction of expenses on 25 sector ETFs from 0.60 percent to 0.48 percent. Among the funds affected by the changes are those tracking Dow Jones, Goldman Sachs and the S&P global industry sectors.
