Key Data and Analysis
Five ETF fee rules: 2015 vs. 2025 standards
| Rule | 2015 Standard | 2025 Update | Verdict |
|---|---|---|---|
| Max ER for index ETF | 0.50% | 0.10% | Updated downward |
| Active justified if beats index after fees | Valid | Still valid | Unchanged |
| Lowest ER best in category | Generally true | Generally true | Unchanged |
| 1% AUM is fair advisor rate | Common | High vs. fee-only alternative | Outdated |
| Bond fund max ER 0.10% | 0.10% | 0.05% | Updated downward |
ℹ️Fee Compression Has Changed the Benchmarks
What was acceptable in 2015 is expensive in 2025. Fee compression has been relentless. The 0.50% threshold for reasonably priced index funds has dropped to 0.10%. Investors in funds that have not kept pace are paying legacy fees.
Scenarios and Comparison
ETF expense ratio standards: historical vs. 2025 benchmarks
| Fund Type | Old Acceptable ER (2010) | Current Benchmark (2025) | Best Available (2025) |
|---|---|---|---|
| U.S. large-cap index | 0.50% | 0.10% | 0.015% (FXAIX) |
| International index | 0.50% | 0.15% | 0.07% (VXUS) |
| Bond index | 0.30% | 0.10% | 0.03% (BND) |
| Target date | 0.50% | 0.15% | 0.10% (Vanguard) |
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