Funds: War of Expense Ratio

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.