Calculating ETF Costs
The table below shows the one- and five-year costs for owning $10,000 of the PIMCO Total Return ETF (BOND), the company’s flagship fund. The table assumes a $7 charge to buy and sell the fund and a bid-ask spread of 0.02% (source: IndexUniverse, October 2012).
Annualized Cost to PIMCO Total Return ETF Investors
|
Cost |
1 Year |
5 Years |
|
Expense Ratio |
0.55% |
0.55% |
|
Bid-Ask Spread |
0.02% |
0.00% |
|
Buy/Sell ($7 @) |
0.14% |
0.03% |
|
Total (annual cost) |
0.71% |
0.58% |
Charles Schwab has ETFs with an expense ratio of just 0.04% ($4 a year for a $1,000 investment). The next table shows the average bid-ask spreads by ETF category for September 2012 (source: IndexUniverse).
ETF Bid-Ask Spread
|
ETF Category |
Spread |
ETF Category |
Spread |
|
U.S. Fixed Income |
0.22% |
Foreign Bond |
0.85% |
|
U.S. Equity |
0.25% |
Currency |
1.06% |
|
Foreign Stock |
0.61 |
Inverse |
1.65 |
|
Alternatives |
0.65% |
Leveraged |
2.31% |
|
Commodities |
0.79% |
Average |
0.92% |
|
Asset Allocation |
0.84% |
Average |
0.92% |