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investing etf index-fund fees long-term

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February 5, 2025 Score: 1 Rep: 147,963 Quality: Medium Completeness: 30%

Bid-ask spread only matters when you buy or sell.

Tracking error only matters if you really, REALLY want to track the index (e.g. you're using it to hedge something that is directly based off of the index, like an index future or options)

Yes, expense ratio matters over the long run as it is a friction to your returns compared to the index.

However, since it's completely impractical to replicate the index yourself, and since index funds typically have very low expense ratios compared to active funds, it's not something I'd be overly concerned with.

One option might be to balance your portfolio between "cheaper" US index funds and "World EX US" funds to gain international exposure. But that might not make a significant difference in the fees.

To be fair, a large enough tracking error may indicate a fund that is not fully replicating the index (which is more likely on a world index where you can't practically buy every single stock in the world) and my indicate additional risk. But unless the tracking error is significant, it's not something that I would pay a lot of attention to unless you're comparing otherwise identical ETFs

February 6, 2025 Score: 1 Rep: 10,926 Quality: Low Completeness: 10%

If the funds are tracking the same exact index and they are both ETFs then yes, the expense ratio is really the only thing you care about.

For the US this is like comparing all the S&P500 ETFs. They all track the same index with the same companies, so purchase the one with the lowest expenses.

Obviously, if the funds track different indexes then you will need to find the overlap (if any) and different sector exposures to really get the full picture.