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.
How to Calculate TCO
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.