As an investor, I love competition.
These past few years, major ETF providers like iShares, Vanguard, Amundi and UBS have been battling it out, lowering fees to attract clients.
Today you can buy a developed world ETF from Amundi that charges only 0.05% per year.
That’s incredible – this allows you to invest in over a thousand companies globally with extremely low costs.
The richest person in the world couldn’t do this a few years ago.
But this raises an interesting question:
If you’re already investing in an ETF, what do you do when a new fund comes out that’s much cheaper?
You’ve got three choices.
Choice 1: Do nothing.
If the fee reduction is just 0.01% or 0.02% per year, honestly, you won’t feel it over the long term.
It’s not worth the hassle.
Choice 2: Sell your existing fund and switch over.
This can make sense if there’s a big reduction in fees.
But check carefully: Will you need to pay capital gains tax on any profits when selling?
And how big are the brokerage fees?
If either is significant, this option is probably a bad idea.
Choice 3: Leave your existing ETFs alone, but put new money into the cheaper fund.
In many cases, this is the best approach.
The only downside? Your portfolio gets slightly more complicated.
It’s a bit harder to rebalance and do tax reporting.
But if there’s a meaningful cost reduction, it’s often worth it.
Here’s what this competition really means for you:
While ETF providers fight for market share by cutting costs…
You get access to global wealth creation and pay next to nothing for the privilege.
Your investment fees keep dropping year after year.
More of your money goes toward building wealth instead of paying fund managers.
This is exactly the kind of “problem” you want to have as an investor:
Should I choose the fund that costs 0.10% or the one that costs 0.05%?
Either way, you’re winning.
I help busy Europeans become confident passive investors through a practical, step-by-step training program called The Index Masterclass.
Click here to access my free training for European investors.