Actual ETF Fees - How to AVOID Getting Robbed by ETF Fees | Summary and Q&A

44.9K views
December 27, 2019
by
Learn to Invest - Investors Grow
YouTube video player
Actual ETF Fees - How to AVOID Getting Robbed by ETF Fees

TL;DR

This video explains the commonly overlooked fees in exchange-traded funds (ETFs), such as commissions, expense ratios, portfolio turnover, and bid-ask spreads.

Install to Summarize YouTube Videos and Get Transcripts

Key Insights

  • ™️ Commissions charged by brokers for ETF trades have become less common due to automation, but it's still crucial to confirm with your broker.
  • 🥳 The expense ratio is the most frequently cited fee, and investors should aim for ETFs with lower expense ratios.
  • 🤱 Implicit fees, such as portfolio turnover costs, can impact overall fees, and investors should opt for ETFs with lower turnover ratios.
  • ✋ The bid-ask spread is an important consideration, as higher spreads can result in higher costs for investors.
  • ✋ Sometimes, paying higher fees for specialized ETFs with strong performance potential can be justified, depending on an investor's research and goals.
  • 👨‍🔬 Researching dividend ETFs and considering implied liquidity in ETFs can be helpful for investors interested in these areas.

Transcript

hi I'm Jimmy in this video we're gonna look at the fees of exchange-traded funds or ETFs for short now in this video we're gonna try to go beyond the typical ETF fees that many investors look at and we're going to look at some ETF fees that are often more overlooked and or more implied ETF fees then towards the end of the video I'm going to touch o... Read More

Questions & Answers

Q: What are some commonly overlooked fees in ETFs?

Some commonly overlooked fees include commissions, expense ratios, portfolio turnover costs, and bid-ask spreads.

Q: Can commissions be avoided when buying ETFs?

Yes, many brokers now offer commission-free ETF trading, but it's essential to check with your broker to ensure they don't charge commissions.

Q: What is the expense ratio, and why is it significant?

The expense ratio is the annual fee charged by an ETF manager to cover operating expenses. It's essential to look for ETFs with lower expense ratios to minimize costs.

Q: How does portfolio turnover affect fees in ETFs?

Higher portfolio turnover can lead to more transaction costs, such as commissions and taxes, resulting in higher fees for ETF investors. Lower portfolio turnover is preferable.

Q: What is the bid-ask spread, and why does it matter?

The bid-ask spread is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask). A lower spread is better for investors, as it reduces costs when buying or selling ETF shares.

Summary & Key Takeaways

  • The video discusses the various types of fees associated with ETFs, starting with commissions that can often be avoided by using commission-free brokers.

  • The most well-known fee is the expense ratio, which is the annual fee charged by the ETF manager to cover operating expenses.

  • Implicit fees, including portfolio turnover and bid-ask spreads, can also impact an investor's costs and should be considered when evaluating ETFs.

Share This Summary 📚

Summarize YouTube Videos and Get Video Transcripts with 1-Click

Download browser extensions on:

Explore More Summaries from Learn to Invest - Investors Grow 📚

Summarize YouTube Videos and Get Video Transcripts with 1-Click

Download browser extensions on: