Part of America's love affair with oversized SUVs and 42" televisions is based on the relationship between size and safety, comfort and style. Investors may have their own size versus safety, style and performance questions concerning whether the size of the ETF funds in their investment portfolio makes a difference. Let's take a look at a couple of the largest ETFs ranked by assets under management, and see if size has helped or hurt performance.

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ETFs Total Assets (in millions) YTD 3 Year (%) Expenses
SPDRS S&P 500 ETF (NYSE:SPY) $58,923 -7.86% -12.07 0.09%
iShares S&P 500 Index (NYSE:IVV) $14,664 -7.79% -12.13 0.09%
SPDR Gold Shares (NYSE:GLD) $33,211 0.10% 13.92 0.42%
iShares COMEX Gold Trust (NYSE:IAU) $2,010 0.01% 13.86 0.40%
PowerShares DB Gold (NYSE:DGL) $101 -0.34% N/A 0.50%
iShares MSCI EAFE Index (NYSE:EFA) $24,099 -12.48% -13.55 0.34%
Vanguard Europe Pacific ETF (NYSE:VEA) $3,243 -12.34% N/A 0.11%
Data through April 8, 2009

Past Performance
The passive management style of most ETFs may lead investors to assume that as long as funds share an investment objective, returns are similar between one fund and another. Comparing the past returns from some of the largest ETFs with the returns of smaller ETFs with similar objectives confirms this assumption. As of April 8, ETFs with a similar focus posted almost identical returns for both year-to-date and 3-year past results.

As a note of caution, investors should still make a habit of taking a close look at the asset class allocation and individual holdings of any ETF rather than relying solely upon the stated investment objective of an ETF fund. Assumptions create opportunities for missteps, which can be avoided with additional research. (For further reading, see Five Things To Know About Asset Allocation and Asset Allocation Strategies.)

The fees investors pay to hold ETFs can vary from fund to fund. In some cases, larger ETF funds can offer lower fees than smaller ETF funds. For example, the PowerShares DB Gold ETF, which holds gold futures contracts, has a higher expense ratio than its two larger counterparts, SPDRS Gold Shares Fund and the iShares COMEX Gold Trust, which hold actual gold bullion.

Beyond Expenses
Based on the small sample list of ETF funds pulled for this test, size alone does not always dictate lower fees. For proof, consider the expense ratio of the Vanguard Europe Pacific ETF versus the iShares MSCI EAFE index.

The issuing firm's overall mission can also play a role, even if the two funds have the same investment objective. Vanguard takes great pride in advertising its low-cost approach to investing, and the lower fees for the VEA fund are an example of its low-cost objective.

Final Thoughts
Larger ETFs, in terms of assets under management, offer investors the safety of liquidity, as they tend to have a higher volume of transactions on an average basis. The larger ETFs also offer investors protection against major swings in the price of the fund, which can be caused by large trades by institutional investors. The lesson here, in terms of size versus performance, is that there is not one solid blanket rule. Investors are better off performing extra due diligence on their ETF options rather than simply relying on size for safety, comfort and style. (For more, see An Inside Look At ETF Construction and ETF Liquidity: Why It Matters.)

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