What Matters in ETF Selection?

11 Pages Posted: 17 Sep 2018 Last revised: 27 Mar 2019

See all articles by David Nanigian

David Nanigian

California State University, Fullerton - Department of Finance

Date Written: September 6, 2018

Abstract

This study examines the impact of both expense ratio and tracking difference on Exchange-Traded Fund (ETF) performance. The relationship between expenses and performance is much stronger than the relationship between tracking difference and performance. This study shows that the slightly positive relationship between tracking difference and performance is attributable to the fact that funds with stronger tracking difference tend to have lower expenses. The practical implication of this study is that low costs should be the main characteristic that investors look for when selecting an ETF.

Keywords: Exchange-Traded Funds, ETFs

JEL Classification: G11, G23

Suggested Citation

Nanigian, David, What Matters in ETF Selection? (September 6, 2018). 2019 Academic Research Colloquium for Financial Planning and Related Disciplines. Available at SSRN: https://ssrn.com/abstract=3248059 or http://dx.doi.org/10.2139/ssrn.3248059

David Nanigian (Contact Author)

California State University, Fullerton - Department of Finance ( email )

PO Box 34080
Fullerton, CA 92834-9480
United States

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