I’m not clear on an issue. If you buy a vanguard ETF through t212, do you still pay the expenses listed on vanguard’s site for that particular ETF?
@Kaplant 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.
I was wondering about this, just checked on my Vanguard account. It is the account fee they charge that can be linked to your bank. So, in essence, I can keep a cash balance of zero in my 212 account and not worry about and shares being sold to pay expenses right?
@Seanyc5 Yes, you don’t need to have the cash in your account to cover the expense. The ETF itself gets adjusted.