The War of Expense Ratios: Vanguard, iShares, Fidelity

San Francisco-based Barclays Global Investors (BGI) is a dominant
player in Exchange Traded Fund (ETF) industry with 98 iShares ETFs
covering $114.1 billion in assets at the end of January. In 2004 BGI's
ETFs posted $43.8 billion in net inflows, more than what went to
Vanguard's and Fidelity's combined inflow.

Boston-based State Street Global Advisors is in No. 2 spot with $72.3
billion spread over 22 funds. Vanguard's ETF asset is $6.1 billion.

Vanguard, on the other hand, has started firing salvos at its competitors
by introducing newer ETFs and cutting the fees drastically. Recently,
Fidelity slashed expense ratio on several of its index funds. It reduced cost
on its widely-subscribed Spartan Total Market Index fund (FSTMX) to
0.10 percent. Vanguard responded by dropping the expense ratio on
Total Stock Market Vipers ( VTI) to unbelievable 0.07% from 0.13%.

The three new Vanguard international Vipers will compete head-to-head
with established ETF offerings from BGI . One of the fastest-growing ETFs
is BGI's $4.8 billion iShares Emerging Markets Index fund (EEM) , which
like the new Vanguard emerging markets ETF, VWO tracks an MSCI
index. Whereas BGI's EEM has expense ratio of 0.75, Vanguard slashed
the expenses for VWO to 0.30 only.

Expense Ratio tends to be a major deciding factor when investors are
shopping for ETFs. Yet, we must remind our readers, they have to pay
broker commissions to buy and sell ETFs, while no-load mutual funds
have no such charges.