Total Cost of Ownership: A framework for ETFs
The indexing landscape has changed. Investors have four options when considering how to implement index mandates: index mutual funds (IMF), Exchange Traded Funds (ETFs), derivatives or separate accounts.
In this paper, we focus on ETFs and when and why it might potentially be more efficient from a cost perspective to use an ETF instead of an alternative wrapper. However, the foremost factor an investor should consider before using an ETF, is whether its exposure is in line with the target. Only then it would make sense to consider a cost comparison between IMFs and ETFs.