ETF Expense ratio

[dropbrick]

Hi Everyone,
How am I getting charged the expense ratio of an ETF ?

Take VUSA with 0.07% expense ratio. I understand this is charged annually but what happens if say I but an ETF and sell it 2 months later ? Or even the same day ?

Is the expense ratio calculated by day ? And charged when I sell the ETF ?

Thanks.

[Scrooge_McCodf]

It’s taken from the value of the ETF. You won’t be aware it has happened.

[BullChew]

A bit more info on this subject:

@David

You don’t pay the fees directly, they’re actually collected from the fund itself. ETF Issuers like Vanguard adjust the NAV (net asset value) of their fund on a daily basis. As an investor, you don’t see the expenses directly.

Think of it this way - the fees are deducted from the portfolio of the ETF itself which makes it worth fractionally less over time. If you invested £1,000 in an ETF with a total expense ratio of 0.5% & the ETF returned 0.5% that year, you’d get to keep all of the £5 profit because the TER (total expense ratio) is already priced in. However, If there was no TER, you’d have actually gotten a return of 1.0% - £10.