If you own these ETFs and don’t already feel fleeced by these high expenses, then don’t sell your shares so you can also bear the costs of closing the funds by having the expenses taken out of your liquidation proceeds. According to the press release, “Each Fund’s net asset value will reflect the costs of closing the Fund as calculated on the liquidation date.”
You could blame FactorShares for hiding these costs, or you could blame the analysts for not performing proper due diligence. However, in my opinion, the SEC is the party at fault for allowing this type of deceptive expense reporting to exist.
When an ETF’s total expense ratio is 33.70% and the SEC allows the fund to claim it as a 0.75% management fee along with a footnote that says to read the prospectus if you want to know more, then there is something wrong with the regulation of ETFs.
Thankfully, FactorShares are closing this week, and this blight on the ETF industry will soon be gone.
This article is brought to you courtesy of Ron Rowland from Invest With an Edge.