ETF providers, like Vanguard, iShares, and SPDR, have been competing to offer investors the lowest cost ETFs, and brokers like Charles Schwab and Fidelity announced earlier this year that they would now have 500 ETFs that investors could trade commission-free. Investors incur another often-overlooked cost to trading ETFs: the spread. Less obvious cost of trading ETFsETFs trade intraday, like stocks, but some ETFs do not have sufficient trading volume, which makes it difficult to get a competitive price. The reason this matters is that a thinly traded ETF often has wide spreads between the bid price (the price someone is willing to buy the ETF) and the ask price (the price someone is willing to sell it). If you look at the trading patterns of these two ETFs, you’ll see some important differences.

Source: Forbes May 05, 2019 16:18 UTC