Citigroup Says as Many as 50% of All ETFs Lose Money for Their Issuers
- Difficult for lower-priced ETFs to cover operating costs: Citi
- Even small fee cuts can lead to millions of dollars in inflows
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Wall Street’s $7 trillion exchange-traded fund is causing headaches for issuers big and small: as many as 50% of their investment products are running at a loss.
Roughly one-third to half of the more than 3,300 US-listed ETFs are likely unable to cover their annual operating costs, according to a Citigroup Inc. analysis. That figure assumes that funds have between $200,000 to $350,000 in fixed costs, with up to 7.5 basis points in variable costs.