The fastest growing new ETF costs more than a mutual fund

New York

OUT of more than 500 exchange-traded funds launched in the past three years, the one that has taken in the most cash charges an annual fee of 0.94 per cent.

Wait, what? That's not a typo. The First Trust Dorsey Wright Focus 5 ETF (FV) has accumulated US$4.2 billion in assets in a little more than a year and a half, taking in money every month. That's despite having a fee that is far higher than even the asset-weighted average mutual fund fee of 0.66 per cent. FV's success flies in the face of conventional wisdom that ETF investors sniff out only the cheapest products while rejecting the expensive ones. After all, while the average ETF fee is 0.61 per cent, the average asset-weighted ETF fee is just 0.30 per cent.