I made the jump into ETF investing this year, and ran into a situation where I was choosing between 2 similar ETF's, DRIV and IDRV. When comparing the 2 on a performance chart, DRIV was the better performer, however it had a much higher expense ratio, and I made the assumption that after the Expense ratio DRIV and IDRV would be closer in net earnings. So I wound up going with IDRV due to the lower expense ratio.
However, someone recently told me that Expense ratio is factored into the price changes, and if one fund is shown to performing better, thats exactly whats happening. I have a not great understanding of expense ratios and how they come to play in performance comparisons (most expense ratio comparison tools make the assumption that both funds have equal rates of growth), so I'm not sure if I made a mistake in this. Any insight into how Expense ratio comes into play with ETFs and overall performance reviews?
Submitted April 25, 2021 at 01:31AM by AMachineMan https://ift.tt/3nk8H8v
