What are the regulations preventing ETF sponsors from increasing the management fees to some exorbitant numbers, like 90% of NAV? Which specific regulation in the U.S. and Ireland, being two most popular ETF registration jurisdictions, limit the fee that an ETF sponsor may charge? Any lawyers here?
Perhaps no "legal" limit on which the fund might charge. However.. if you think charges are excessive, you can always invest in alternative.
Yes, but if I am already invested, then can they simply grab my money by increasing this fee overnight? What is there to prevent them from doing so?
They can raise fees but must inform account holders first. https://www.perplexity.ai/search/can-etf-sponsors-raise-fees-wi-qxPdWdc1SlSg.Dm4PUSTsg
There seems to be many ways the managers of an ETF can screw their customers. One is the "change of the composition" of the ETF and then sell their assets at fire sale prices.
No, because if they change to 100% per day (after hours) you lost all your money before you can even trade out of the position!
Yes, that's the inherent risk built into an ETF. For example, if Vanguard or State Street want to earn a lot of money in a short notice they can just up their fees to 100% per day on all their ETFs and they both earn about $3T each within a day.
All you guys concerned about what an ETF manager "might" do to steal your money, you can fuggetiboutit. EFTs are regulated securities and have rules... none of what y'all are concerned about are "in the rules". When I said "no legal limit" to their fees... I was meaning an ETF might charge comapratively high fees... like 2-3%... and they have to disclose whatever their fees in the fund's' prospectus.. which cannot be changed on the fund manager's whim without SEC regulatory allowing and perhaps even a majority vote of the shareholders.
It's already happened small scale. Remember the ETF bragging about dropping Lukoil? They sold off their customer assets at fire sale prices in a rigged market. (Regular people were not allowed to buy.) The supposed prices quoted in the US market were insane. It was selling at a PE of 1 for a company with rights to something like 3% of the world's proven oil reserves. But it was easy for the fund to virtue signal with someone else's money. Fiduciary duty meant nothing. Getting political favor was what mattered. Plus only the big multinational firms were allowed to be on the buy side of the fire sale. I believe there were also some plans for the firm running the ADR to screw customers. The question is not really can they get away with screwing someone but more, can they get enough political cover to do it. Hell Corzine was allowed to run a fund again after misappropriating something like a billion dollars of customer assets. The feds are too busy harassing Elon for not hiring foreigners to do ITAR work at SpaceX, etc.