Fees hurt your returns

Article Excerpt

Lower management expense fees (MERs)are a key selling point for ETF investors. Indeed, this month, we highlight—as we do each issue—the MER for each funds we cover. Even so, it’s easy for investors to lose sight of what a difference even a few basis points makes to your return. Here’s a case in point: While iShares offer two very similar emerging-market ETFs, their MERs differ significantly. The first, ISHARES MSCI EMERGING MARKETS ETF (New York symbol EEM), gives you exposure to large and medium-size companies listed in 24 emerging markets. The portfolio now holds 1,222 stocks; the top 10 account for 25% of assets. Stocks are weighted based on their market cap. The fund has $30 billion under management and charges investors a somewhat high 0.67% MER. The ISHARES CORE MSCI EMERGING MARKETS ETF (New York symbol IEMG) tracks the MSCI Emerging Markets Investable Index and lets you tap large, medium and small-cap stocks in 24 emerging markets. The portfolio holds almost 2,500 stocks, with the top…