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The hidden costs of bond ETFs

Fixed income exchange-traded funds often come with high bid/ask spreads. Investors can easily end up paying more in trading costs than they do in annual fund expenses

The hidden costs of bond ETFs

There are 280 fixed income exchange-traded funds on the market today—four times as many as in 2008.

Fund companies are rolling out new products aimed at helping investors minimise the impact of rising interest rates, among other strategies. But bond ETFs still haven't gained the popularity of stock ETFs, and, until they do, investors should be wary of the newest entrants. Not because the strategies are questionable-because their pricing is.

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