The race to lower costs in the investing world has officially hit a new low (or high, depending on how you look at it) with the launch of a new exchange-traded fund (ETF) that essentially pays you to invest in it.
What might seem like a great opportunity, however, comes with a big warning.
Beware of ‘Negative’ ETFs With Introductory Offers
Salt Financial has filed paperwork with the Securities and Exchange Commission that would allow its Salt High Trubeta US Market ETF to begin paying people a nominal amount of money to invest in it. The goal is to attract more assets.
The Manhattan-based financial firm already manages about $10 million in assets through the Salt High Trubeta US Market ETF, according to CNBC.
But that’s chump change in the world of ETFs. So now it wants to pay you 0.05% on your money if you invest in this ETF — but only on the first $100 million under management and only until April 2020.
Still, Salt Financial’s offers sound pretty good, right? Not so fast. There are two things to understand here.
First, the 0.05% means you’ll get about 50 cents for every $1,000 you have in the ETF.
Second, when that introductory offer ends and they stop paying you in about a year, you’ll be paying them to invest.
How much? Twenty-nine basis points, or 0.29%, which is a lot higher than other ETF products that are widely available in the marketplace.
Take a look at some other providers and their products that give investors broad exposure to the world of U.S. equities:
| Provider | Fees |
| JP Morgan | 0.02% |
| BlackRock iShares | 0.02% |
| Charles Schwab | 0.02% |
| Vanguard | 0.04% |
| Salt Financial | 0.29% |
So the message is this: Investing by its very nature is a long-term pursuit. As such, you’ve got to pay attention to the costs over the long haul, not just what you will (or won’t) pay to invest during the first year that you put your hard-earned money to work for you!
