Match racing: NZ PIE funds vs US ETFs
Equity ETF background
There are an astonishingly large number of equity ETFs listed in the US – in fact there are over 1,300. The average expense ratio (total management fee) for large cap equity ETFs is 0.39%. For broad equity ETFs covering all market caps the average expense ratio is higher, at 0.51%. Some (but far from all) US equity ETFs are very cheap and can have an expense ratio less than 0.10%.
Below, we provide a “real life” US ETF vs NZ PIE fund expense comparison by matching a Pathfinder PIE fund against the US ETF alternatives. This is not intended as a product push, but rather it is intended to be a reasoned example of how the low fee ETFs are not always the cheap solution they appear to be. Investors and advisers need to look further than simply the headline expense ratio.
Pathfinder’s Global Water Fund is a niche equity fund directly investing in water industry stocks which can include industrials, utilities, tech and materials companies. There are several US ETFs that also invest in the water theme. Let’s start by comparing the headline expense ratios:
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