top-three-costliest-ETFs

Which are the three costliest ETFs? All you need to know

Earlier we read about top 3 cheapest ETFs in terms of expense ratio. In this article we will read related to top three costliest ETFs in terms of expense ratio.

Exchange Traded funds and mutual funds are two of the most successful long-term investment vehicles. You may even have some of it in your pension fund.  

However, you may not have the awareness that a portion of your portfolio is allocated to a charge termed an expense ratio each year. It’s critical to understand the costs you’re paying no matter what you’re investing in. 

And, given the prevalence of mutual funds and exchange-traded funds (ETFs), many of us spend an annual expense ratio out of our portfolios. You will learn about expense ratio and why is it essential, and how to spot a good one when you see one.

What is an expense ratio and what does it mean? 

Expense ratio is fees that a mutual or exchange-traded fund charges an investor. This charge covers the costs of management, asset allocation, marketing, and other services.  

Calculation of expense ratio is done on an investor’s annual expenditure. ETF expense rates are usually less than 1%. That means you spend less than $1 per year on expenses for every $100 you invest. 

However, not all ETFs are this cheap to own; some ETFs have an expense ratio that might go into double digits. 

Let us look at the three most expensive ETFs in terms of their expense ratio
Rank ETF SymbolExpense Ratio
1 VanEck BDC Income ETFBIZD10.07%
2 Virtus Private Credit Strategy ETFVPC6.46%
3 AdvisorShares Ranger Equity Bear ETFHDGE5.20%

Let’s have a look at these ETFs one by one.  

VanEck BDC Income ETF 

BIZD is a focused index of publicly traded private-equity companies in the United States: The ETF invests in the equity and debt of mid-sized private companies by purchasing shares of companies that invest in them. 

To ensure diversification, the index selects the most significant and most liquid companies, considered Business Development Companies (BDCs) and weights them by market capitalization, with a cap of 20% per issuer. 

Small and midcap stocks can be in the index too. The fund employs a sampling technique, which means it will not own all of the equities in the underlying index but will instead hold securities with similar investment profiles.  

The index re-evaluated every three months.

Performance 
Performance [as of 18/03/22]1 year3 years5 years10 years
BIZD15.80%13.11%8.30%

The fund invests entirely in the United States

Top 10 holdings
top 10 holdings and one of the three costliest ETFs

Source: etf.com

BIZD details
BrandVanEck
Expense Ratio10.07%
YTD Return1.86%
AUM$669.71M
Number of Holdings25
Avg. Spread ($)$0.02
Average Daily $ Volume$6.08M

Virtus Private Credit Strategy ETF 

VPC is a fund that invests in US-listed closed-end funds to make money from private credit markets (CEFs). CEFs supervised as business development companies (BDCs) and non-BDC CEFs that concentrate on personal loans are the two primary types.  

The BDCs use a variety of loan and equity structures to engage in middle-market companies with below-investment-grade ratings. Loans, CLOs, and senior loans are among the investments made by non-BDC CEFs.  

The VPC index looks for consistent dividend payments over the last three years. Non-BDC CEFs are even further vetted to eliminate excessive price premiums or discounts compared to NAV. The dividend yield is the weight of the security. 

Because the fund is a fund-of-fund, investors must anticipate spending twice as much due to cost compounding. The benchmark is rejigged every year and rebalanced every three months.  

Performance 
Performance [as of 18/03/22]1 month3 months1 years3 years
VPC-2.87%-3.49%6.96%6.17%
Peer Comparison
ParameterVPCHNDL
BrandVanEckStrategy Shares
Expense Ratio6.46%0.97%
YTD Return-0.72%-7.65%
AUM$29.69M$1.61B
Number of Holdings5920
Avg. Spread ($)$0.09$0.02
Average Daily $ Volume$336.24K$20.79M

AdvisorShares Ranger Equity Bear ETF 

HDGE builds a portfolio of short positions in large and midcap US-listed equities using a blend of quantitative and fundamental considerations. 

This actively managed fund employs a bottom-up strategy to identify companies with poor earnings quality or ambitious accounting techniques and profit when market prices change to reflect the reality of these aberrations.  

However, it is to be noted that a protracted bull market is a challenging environment for a short-only approach, and returns may reflect this. The fund’s strategy also includes immediate purchases and sales of securities, which could result in a higher portfolio turnover and, as a result, lower returns.  

Overall, HDGE has a solid asset base and can act as a substitute for traditional inverse equity funds. 

Performance 
Performance [as of 18/03/22]1 year3 years5 years10 years
HDGE-0.85%-27.36%-21.58%-18.53%
Peer Comparison 
ParameterHDGESOGU
BrandAdvisorSharesDe-SPAC
Expense Ratio5.20%0.95%
YTD Return0.94%25.83%
AUM$91.24M$24.79M
Number of Holdings50
Avg. Spread ($)$0.05$0.20
Average Daily $ Volume$4.01M$1.95M
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