Turnover costs can matter more than you think with some ETFs, writes John Prestbo in the the Wall Street Journal.

For example, Prestbo writes this on the issue:

While it's true that low turnover is a hallmark of broad-market indexes such as the Standard & Poor's 500-stock index and the funds that track them, some other indexes and index funds shuffle their components extensively, which can lead to higher expenses that reduce returns.

Turnover also can increase temporarily when index funds change their benchmarks, as Vanguard Group is doing with 22 exchange-traded funds next year.

The WSJ article quotes Morningstar ETF analyst Timothy Strauts as saying "Index-based funds typically have low turnover, but it isn't true across the board."

To read more about Prestbo's take on the issue, turn to the the Wall Street Journal article. 

Edited by: Tommy Fernandez


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