IVV hasn't taken any assets from SPY, Jim. But the competition between those two funds proves my point.

When iShares made all that noise about launching IVV at 10bps, SSgA was listening. They lowered the expense ratio on SPY from 17 bps to 12 bps on March 14, 2000, two months before IVV launched. That collapsed the price differential to just two basis points - close enough for most investors to stick with the more liquid SPY.

Contrary to your point, I don't think the assets flowed into the "better product" at all. When IVV launched, SPY had about $15 billion in assets. Today, it has $82 billion, meaning it added $67 billion in new assets over the past eight years.

IVV, meanwhile, has added $17 billion.

Who's the winner there?

I think you're right that the importance of an individual fund's brand is the overarching factor.

But that just proves my point: Investors don't care enough about expense ratios. They go with what they know. And that's too bad, as I'd like to see more price competition in this industry, particularly in the newer areas of the market that have opened up over the past year or two.

Going back to IVV vs. SPY, at least back then iShares put in the effort to compete on price. They priced IVV aggressively in an attempt to steal assets from SPY. And SSgA responded by slashing SPY's expense ratio from 17 bps to 12 bps.

Now THAT's the kind of action I want to see in this industry.