'Poor execution strategies' cost ETFs $1.7bn in rebalancing costs

56% of US ETFs

James Baxter-Derrington
clock • 2 min read
For a $2m retirement account that accrues over the course of 30 years, these inefficiencies would cost the individual $29,000 at the point of retirement.
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For a $2m retirement account that accrues over the course of 30 years, these inefficiencies would cost the individual $29,000 at the point of retirement.

Predictable rebalancing strategies that can be front run by informed traders are costing ETFs $1.7bn, an issue that can be tempered with “not-so-complex execution strategies”.

According to academic research by Sida Li, ‘sunshine ETFs', those which make no attempt to hide either when or what they trade, pay 67 basis points in execution costs, compared with those that mask either...

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