How do you pay the costs of an ETF?

Question

What are the costs of buying and keeping an ETF? How and when are they paid?

Answer 1

ETF's trade like a stock, so whatever commision you pay to your broker to trade a stock is what you'd pay on an ETF.

There are some small fees in an ETF. However, it's much much better than mutual funds, any day of the week! You get the diversification without the extra fees, rules, and have much lower overhead!

Hope that helps!

Answer 2

An ETF has two costs. The 1st cost is the brokerage fee to buy and sell it. If you go through an online broker, it is about $10. The 2nd cost is the fee to run the ETF. The fee usually ranges from 0.2% to 0.6% of the total fund value. This cost is reflected in the price it trades at (meaning it is not an additional fee you have to pay out of pocket).

Answer 3

The costs, as with any mutual fund, are contained in the value of the fund, but with Exchange Traded Funds they are very low costs. As an example, the ishares New York Stock Exchange 100 fund (symbol: NY) has a recent price of $69.73 with a Net Asset Value (NAV) of $69.71 and there are some 5.3 million shares of this outstanding, market value of some $369 million. This ETF has an Expense Ratio of some 0.20 percent, which is nicely low. If I bought a share of this than something like 13 or 14 cents would go to the cost of buying stocks, selling stocks, collecting dividends from the stocks, paying dividends, and general accounting of all that is involved. To show how close this fund works to the theoretical, the index (as of the end of August) had a year-to-date standardized return of 7.55 percent and this fund had 7.40 percent--which fits. The stocks are chosen by simple list of the 100 largest, by market capitalization, stocks traded on the New York Stock Exchange. There are oodles of similar ones to consider, I just picked one from a list.

Answer 4

The most important cost of buying an ETF is brokerage commission. The cost of keeping ETF is very low, since there is no management involved; administrator simply takes it from the fund and reflects it in published NAV calculations (obviously, the market price can differ from NAV per share).

Answer 5

the expenses of an exchange trade fund are internal expenses and are deducted from the dividends and gains posted to the fund. You will never see these costs unless you request a prospectus. In addition the cost to buy and then again the cost to sell these shares of the ETF can also be considered costs. i Hope this helps.

Answer 6

ETF - Exchange Traded Fund or ET Index Fund.

At Ameritrade it is the normal share trade cost no matter the numder of shares.