Insights


Understanding Total Cost of Ownership

An ETF’s total cost of ownership (TCO) goes beyond its expense ratio.

ETF TCO has two components: holding costs and transactional costs.

Both components need tobe taken into account to conduct comprehensive ETF due diligence.


Matthew J. Bartolini, CFA
Head of SPDR Americas Research, State Street Global Advisors

What is total cost of ownership (TCO) and how should it be included in your due diligence process? I sat down with Robert Forsyth III, Head of SPDR Americas Client Enablement Group and Colin Ireland, Head of SPDR Americas Institutional & Home Office Strategy to discuss the components that go into TCO and how you should think about it before selecting an ETF.

  • The two components of TCO (:35)
  • How should institutional investors approach TCO? (02:50)
  • Should premium/discount be included in TCO? (03:50)
  • Do investors have to look at all components of the TCO equation? (05:45)

How to Calculate TCO

To learn more about TCO, please visit spdrs.com/totalcost.

For additional insights, you can follow SPDR Blog.

Disclosures

ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs' net asset value. Brokerage commissions and ETF expenses will reduce returns.

There can be no assurance that a liquid marketwill be maintained for ETF shares.

Frequent trading of ETFs could significantly increase commissions and other costs such that they may offset any savings from low fees or costs.