4 Companies You Can Own That Operate Your Favorite ETFs

Matt Thalman - INO.com Contributor - ETFs

SPDR S&P 500 ETF (SPY), Schwab U.S Broad Market ETF (SCHB), State Street Corporation (STT), Invesco (IVZ), Wisdom Tree (WETF), BlackRock (BLK), ETF investing, ETF's, benefits of etfs,

But first, maybe you are wondering what an ETF operator does and how do they make money?

Plan and simply an ETF operator sponsors and runs an exchange traded fund. ETF's are either managed or unmanaged. Managed would mean someone is actually deciding which investments to hold in the ETF in order to gain the highest return. Unmanaged ETF's are ones that simply track a corresponding index; such is the case with the SPDR S&P 500 ETF (SPY) which tracks S&P 500.

An ETF operator makes its money by charging a fee to manage the ETF. These fees are usually displayed as a percentage. These fees or the annual expense ratio, as it is often called, can range in amounts from as little as 0.04% which is the case with the Schwab U.S Broad Market ETF (SCHB), up to more than 3% with some of the exotic funds. Managed funds always carry a higher expense ratio as they require daily monitoring by the managers. Whereas with unmanaged funds a manager only has to make changes when the index the fund tracks changes, which is not usually very often. Think of it this way, managed means constant attention baby-sitting while unmanaged means no to little baby-sitting and the more baby-sitting, the higher the price.

So now that we know how they operate and were the revenue comes from let's take a look at a few ETF operators. Continue reading "4 Companies You Can Own That Operate Your Favorite ETFs"