How to Analyze Total Cost of Ownership

When choosing from the more than 2,000 US-listed exchange traded funds (ETFs), there are four major areas of due diligence: cost, risk/return, holdings make-up, and tracking accuracy for index-based strategies or the manager’s investment process for active funds. While the last three are often heavily scrutinized, many analyze cost more simply, focusing solely on an ETF’s expense ratio. However, it's important to evaluate an ETF's total cost of ownership (TCO).