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Zero-Fee ETF Outperforms S&P 500 Giant
4 Oct
Summary
- BNY Mellon's ETF offers zero fees, a rare industry feat.
- The ETF has slightly outperformed a major S&P 500 fund.
- Low-cost indexing and alternative benchmarks drive fee compression.
The investment landscape is witnessing a significant shift as ETF fees continue their downward trend, pioneered by firms like Vanguard and followed by major players. BNY Mellon has pushed fee compression to its extreme with the BNY Mellon US Large Cap Core Equity ETF (BKLC), which boasts a 0.00% expense ratio. Launched in 2020, BKLC tracks the Solactive GBS United States 500 Index TR, providing exposure to approximately 500 large-cap U.S. companies. This strategy allows BNY Mellon to bypass licensing fees associated with the S&P 500 index, passing savings directly to investors.
Remarkably, BKLC has delivered slightly higher annualized returns than the Vanguard S&P 500 ETF (VOO) since its inception on April 9, 2020. While the difference is marginal, it highlights the effectiveness of alternative benchmarks and efficient fund management. Securities lending also contributes revenue, helping to offset operational costs. This development suggests that investors can achieve comparable U.S. equity market exposure without paying traditional fees, challenging the industry norm.
