I wonder if anyone has dug up information on the actual costs of index funds?
I made some small comparisons, and based on these, it seems the costs are actually about a percentage point higher than the reported costs.
Here, for example, is a comparison between a synthetic ETF tracking the S&P 500 ESG index and a fund tracking the corresponding index, the Nordnet USA Index. If you trail by 3.5% over three years, it means the costs are about 1.14% higher than in the ETF. Comparing ongoing charges, the cost difference should only be 0.16%.
Nordnet World Index, on the other hand, has lost about 2% to a physical ETF tracking the exact same index over the last three years. The actual cost difference is therefore about 0.72%, even though the difference in ongoing charges is only 0.15%.
This makes me rethink the strategy a bit regarding at what point it is worth switching from index funds to ETFs.
Edit. This post gives a generally too negative impression of index fund costs. Later in the thread, the gross tracking differences for Handelsbanken’s USA and World funds were calculated, and they look reasonably low compared to the costs of Nordnet’s funds.