The financial news agency Bloomberg called it a milestone for the investment industry: in August, the total amount of money invested in index-based equity funds and ETFs (Exchange Traded Funds) in the US exceeded the capital invested in actively managed funds for the first time. Stock picking is not dead, Bloomberg says. But the era of fund managers as the driving force on the US stock market is coming to an end.
Costs are return killers
The European market is not yet as advanced, but passive investment funds are becoming increasingly popular with investors here too. This is due in no small part to the fact that their appeal to investors keeps growing as fund fees fall. quirion also monitors the ETF market continuously. Fund costs play an important role here, because what good is a positive return if a large part of it is eaten up again by costs? Regularly – including as part of the annual rebalancing – quirion reviews the products in its portfolios and is thus able to reduce fund costs noticeably again and again.
Vanguard, one of the industry's leading providers, cut its fees only recently. Experts expect that other providers will follow suit. An end to the downward spiral is not in sight, writes Handelsblatt, quoting Sean Hagerty, head of Vanguard's European business, as saying: „We've been turning the dial downward for as long as we've existed, and we will keep cutting fees further still.“ The lower fees apply to 38 funds, of which 13 are ETFs and 25 are index funds that Vanguard distributes in Germany.
Always keeping an eye on costs
quirion investors automatically benefit whenever new, low-cost funds come onto the ETF market. „quirion reviews the ETF range regularly and, where quality is equal, gives preference to cheaper ETFs. The client doesn't have to do anything. In the past two and a half years alone, we have cut costs from 0.40 percent to 0.21 percent,“ says Dr. Anselm Hüwe, Senior Analyst at quirion. Further cost reductions are entirely realistic in the future.
It's important for investors to know that the total expense ratio (TER) reported by fund companies only covers those costs with which a fund company charges an investment fund over the course of a financial year. The actual costs of a fund usually differ somewhat from the TER: additional trading costs are incurred, for example, when the fund changes its composition. On the other hand, a fund can also generate additional income through securities lending. When selecting funds, quirion also pays strict attention to these real costs – a service that can only be delivered through a structured, professional selection process.
On the client's behalf
With quirion, clients pay a transparent fee of 0.48 percent of the investment amount per year in the Basis package, with the management of the first €10,000 even being free of charge.
The return advantage created by quirion's low-cost products and favorable fee makes a positive difference for clients. This is how quirion clients achieve the fair market return – and they do so starting from an investment sum of just €1,000.
Want to do the math yourself? The quirion cost calculator shows the total costs for any investment amount and also compares those costs with conventional investments and with those of other robo-advisors.
