Why ETF fees keep getting cheaper — the numbers behind it

The yearly fee a fund charges — its TER — has been falling across most of the ETF industry for years. By the end of 2024, the average yearly fee varied a lot by what a fund invests in: around 0.35% for a typical stock ETF, 0.22% for a bond ETF, and as low as 0.13% for a money-market ETF, according to data compiled by LSEG.

Why do fees keep dropping?

Competition. When several funds track the same well-known index, the fee is often the clearest difference between them, so providers compete hard on it. Hundreds of European ETFs cut their fees at some point between 2018 and 2024.

Does the cheapest fund always win?

Not automatically. A cheaper fund tracking a different index, or built differently underneath, is not directly comparable to a pricier one — the fee is one honest number among several worth checking, not the whole story.

How much does the fee actually matter to you?

More than it looks. A fee is charged every year, on your whole balance, for as long as you hold the fund. Our fee calculator lets you compare a 0.20% fee with a 0.80% one using your own numbers, over your own time horizon.

This is a look at where the industry’s average fees stand, not a recommendation of any particular fund. This is education, not advice.