How much did the U.S. ETF industry bring in last year from fund fees?

The answer, using very blunt math and some simplifying assumptions, is $4,258,804,274.49.

That number is riddled with errors, but it gets you in the ballpark. To calculate it, I took the assets under management of all ETFs and ETNs listed in the U.S. at the end of 2012 and multiplied them by their stated expense ratio.

This consciously overlooks a number of things, including:

• ETF assets generally grew during 2012, and I used year-end data to calculate the fees, therefore overstating how much the industry actually earned.
  
  
• Some ETFs launched partway through the year, but I applied the expense ratio as if it were charged for the full year, again overstating revenues.
  
  
• Offsetting this, expense ratios generally drifted lower throughout the year. By using the year-end expense ratio, I understated the earned revenue.
  
  
• The expense ratio is not the only source of revenue for these firms.

Nonetheless, $4.3 billion is an interesting number, and it puts the growth of the ETF industry in context. We talk a lot about how low ETF fees are, and they are. But still, this is a real industry: $4.3 billion is real money.

It’s also up since last year. A lot. Using the same simplifying methodology, ETF industry revenues from fees in 2011 were about $3.4 billion—a 26 percent increase in revenue is pretty good.

What else can we learn?

The top-12-earning ETFs make an interesting list. The iShares MSCI Emerging Markets ETF (NYSEArca: EEM) generates the most revenue from its expense ratio of any ETF, with $323 million in annual fees. The SPDR Gold Shares ETF (NYSEArca: GLD) nearly matches it, despite a lower expense ratio, as its larger asset size helps drive nearly $290 million in fees.

Going down the list, there are a few surprises, and one that drives me crazy.

For starters, look at Vanguard. Vanguard may be an ultra-low-cost provider, and getting broad-based emerging markets exposure for 0.20 percent is an amazing deal, but VWO is pulling down $118 million-plus in fees each year. That’s not bad for a co-op!

The iShares Preferred Stock ETF (NYSEArca: PFF) shocks me too: When did that become a $10 billion-plus fund earning $50 million-plus per year?

On the “drive-me-crazy” side, you have the iShares FTSE China 25 ETF (NYSEArca: FXI). The fund is generating more than $60 million a year in fees thanks to its high expense ratio, despite the fact that there are cheaper products offering better exposure to China. There’s even one from iShares itself: the iShares MSCI China ETF (NYSEArca: MCHI), which charges just 0.60 percent in annual fees. Did I mention that MCHI outperformed FXI by almost 5 percentage points last year? Investors could have saved $11 million in fees, and gotten better performance to boot!

Of course, not all ETFs are making their issuers money. There are 477 ETFs generating less than $100,000 in revenues from fees each year. Those aren’t buying anyone any yachts.

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