All Things Equal (Never), Buy ETFs Based on Their Fees

Roger Nusbaum submits: Michael Krauss had a post on Seeking Alpha saying that ETF fees are largely irrelevant. The context of the comments is that everything else being equal, fees do matter -- but very rarely is everything else equal. I agree.

Michael gives a few examples, and I can give a different one. On Friday StateStreet launched a bunch of emerging market ETFs including a broad based fund with ticker (GMM) that is similar to iShares MSCI Emerging Market Fund (EEM) -- with one huge difference: EEM has 15% weighted to South Korea, and GMM appears to be zero weight.

EEM has an OER (operating expense ratio) of 75 basis points, while GMM's OER is 60 basis points. Given the very disparate country composition, how often is the difference maker likely to be the 15 basis points? Probably never.

If you want broad based emerging market exposure, and want South Korea to be a part of it, there is no question that EEM is the better choice. If you wanted broad based exposure without South Korea, but bought EEM because it was cheaper, you'd cutting off your nose...