ETFs Aren’t Always Cheaper Than Mutual Funds. Here’s What to Compare Instead

Walk into astir immoderate speech astir money investing and you volition perceive the aforesaid shorthand: ETFs are cheaper than communal funds. It is simply a tidy regularisation of thumb, repeated truthful often it has hardened into received wisdom. Shelley Antoniewicz, a longtime economist who tracks money manufacture data, says that shorthand softly misleads investors who dainty it arsenic a substitute for really speechmaking a prospectus.

Quick Read

• Shelley Antoniewicz argues that money operation matters acold little than scale, noting equity communal money fees dropped 60% from 99 ground points successful 2000 to 40 ground points today.

• Act now: the expert who called NVIDIA successful 2010 conscionable named his apical 10 AI stocks — and iShares Core US Aggregate Bond ETF didn't marque the cut. Grab the names FREE today.

Speaking connected The Rational Reminder Podcast occurrence "Economist: The State of Investing successful 2026," Antoniewicz argued that the operation of a money matters acold little than its scale. The header fig she keeps coming backmost to: connected an asset-weighted basis, equity communal money investors paid 99 ground points for an equity communal money successful 2000, compared to conscionable 40 ground points today, a 60% decline. That compression is the existent communicative of the past 25 years, and it has happened wrong some wrappers.

The Myth That Will Not Die

The cliche took clasp for bully reason. The largest equity scale ETFs are genuinely cheap. The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) carries a nett disbursal ratio of 0.000945, oregon 9.45 ground points, arsenic of March 17, 2026, according to State Street's SEC filings. At that price, a $100,000 presumption costs little than 10 dollars a twelvemonth successful money fees.

That fig is imaginable lone due to the fact that SPY is enormous. The fund's apical holdings work similar a rotation telephone of the U.S. market: NVIDIA astatine 7.58% of nett assets, Apple astatine 6.66%, Microsoft astatine 4.91%, Amazon astatine 3.64%, and Alphabet's Class A shares astatine 2.99%. Spread fixed operating costs crossed hundreds of billions successful assets and the per-investor measure collapses. Economies of scale, successful different words, bash astir of the work.

Act now: the expert who called NVIDIA successful 2010 conscionable named his apical 10 AI stocks — and iShares Core US Aggregate Bond ETF didn't marque the cut. Grab the names FREE today.

What Antoniewicz Actually Said

Her sharper constituent is what investors should instrumentality from that math. "Even if you were to look astatine the aforesaid plus class, it is not a fixed that the ETF volition ever beryllium cheaper than the communal fund," Antoniewicz said. "A ample communal money tin person a little disbursal ratio than a smaller ETF."

ETFs person multiplied crossed plus classes implicit the past decade, and the newer, narrower, oregon much exotic the strategy, the much its outgo operation looks thing similar SPY. A thematic ETF with $80 cardinal successful assets has precise antithetic portion economics than a flagship scale fund. Meanwhile, respective ample organization communal money stock classes present transportation single-digit basis-point fees that vie straight with the cheapest ETFs.