One of the main reasons for the wide popularity of these investment schemes is undoubtedly the low fees they collect, unlike the traditional scheme 2-20 of the hedge funds - 2% of the assets and 20% of the profits.
According to a study by the Investment Company Institute, the spending rate of US index funds fell by nearly a third from 2009 to 2016. Or it is down by 32% on average to 23 basis points (or 0.23% of the value of assets), down from 34 basis points in 2009.
The data covers the long-term bullish market that emerged after the financial crisis of 2008.
Meanwhile, the index funds industry is now managing assets worth more than $2.3 trillion, according to FactSet data. The assets of the industry are constantly reaching new and new highs every month in recent years.
The largest index managers, including Vanguard and BlackRock, through their funds, have already announced a reduction in their fees several times. The three largest companies in the sector manage over 70% of the total assets of the industry.
Many of the most popular index funds have a fee of less than 0.1% of their assets. For example, BlackRock's S&P 500 fund has fee at just 0.04%, which means $4 for every $10,000 invested.
Funds investing in fixed income instruments have an average charge of 0.2%, where the fall is far less against the average 0.26% in 2013.
No comments:
Post a Comment