Jim Wiandt

Barclay's ETFs in Play - Cheap to Hold, Easy to Trade

In a further boon to index investors, Barclays has launched a series of funds known as iShares that have record-breaking low expense ratios.

During the month of May, Barclays will commence trading of 14 new funds. Four, tracing the S&P 500, the Russell 1000, Dow Jones Internet, and Dow Jones Technology indexes began trading May 19, 2000.

Barclays Global Investors is the largest manager of index funds in the world. The group controls more than $780 billion in assets globally, compared to the $550 held by the Vanguard Group.

Until recently, however, Vanguard has held a firm grip on the title of keeper of the lowest fees. Barclays' new iShares S&P 500 (IVV) will have an expense ratio of 0.0945%, shattering the record long held by Vanguard's open-ended 500 fund, which has an expense ratio of 0.18%. Recently other ETFs had already given Vanguard a run for its money, with State Street's S&P 500 ETF (SPY) announcing in March an expense ratio that was lowered to 0.12%.

Expense ratios for the other iShares range from 0.15% for the Russell 1000 fund to 0.60% for sector funds like the Dow Jones Technology Index fund.

Barclays is unlikely to hold the low expense ratio title for long, as Vanguard has already filed with the SEC to launch a series of ETFs of its own at as yet unannounced expense ratios. In the fiercely competitive pricing battle that is unfolding, the Vanguard ETFs may very well reclaim the mantle of least expensive index funds. It's music to our ears.

IndexFunds.com Staff