PowerShares: Growing Assets But With High Expense Ratios

The Wall St. Journal's Jen Ryan today profiles PowerShares Capital Management, the fourth largest ETF provider. PowerShares had an impressive year, introducing no less than 32 new funds that attracted about $2.7 billion in new assets -- expanding their asset base more than ten-fold. The Journal cites ETF Investor editor David Jackson on the unique challenge the company faces against the two giant ETF providers:

"The problem which PowerShares faces is that between them, Barclays and State Street basically cover all the tools that most investors need to build a diversified portfolio..., so PowerShares has to focus on slightly quirky ETFs," Mr. Jackson said.

He added that "they're doing as good a job as anyone could under very difficult circumstances."

The article goes on to address a significant concern with PowerShares' funds -- higher than average expense ratios:

Most PowerShares ETFs have a 0.6% fee. According to data provided by ETFGuide's DeLegge, as of the fourth quarter, the average expense ratio for broad-market ETFs was 0.26%, 0.46% for industry and sector ETFs, 0.52% for global and international ETFs, 0.61% for emerging-market ETFs, and 0.47% for specialty index ETFs.

Read the whole article (sub. req.).