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  • FIRST POST
    • boomsmitty
    • By boomsmitty 15th Apr 19, 5:57 PM
    • 13Posts
    • 1Thanks
    boomsmitty
    ETF's and their fees
    • #1
    • 15th Apr 19, 5:57 PM
    ETF's and their fees 15th Apr 19 at 5:57 PM
    Hello

    I have a quick question:

    I'm looking at the Vanguard 80% Equity Fund and am beginning to understand the underlying allocation of the Vanguard Funds within. The 3 ETF's in there are what have me confused.

    ETF's can be bought and sold like shares so therefore do they incur trading charges? How often do Vanguard buy and sell them, every day? The OCF is 0.22% but does this mean that trading costs, if any, get taken from the fund itself?

    Can't get my head around it. Why are the ETF's in there? I need to research more but any help would be welcome.

    Thanks
Page 1
    • masonic
    • By masonic 15th Apr 19, 6:21 PM
    • 11,563 Posts
    • 9,205 Thanks
    masonic
    • #2
    • 15th Apr 19, 6:21 PM
    • #2
    • 15th Apr 19, 6:21 PM
    Yes, internal trading costs are hidden costs associated with all funds that invest in stock market listed instruments. It is unlikely Vanguard incurs significant costs through trading in its own ETFs. Funds need to create and cancel units every day the fund is traded. This would normally mean buying and selling the underlying assets to keep the fund fully invested.
    • Alexland
    • By Alexland 16th Apr 19, 12:30 AM
    • 4,908 Posts
    • 4,237 Thanks
    Alexland
    • #3
    • 16th Apr 19, 12:30 AM
    • #3
    • 16th Apr 19, 12:30 AM
    Vanguard have calculated that VLS80 has transaction costs of 0.04% in addition to the OCF of 0.22% see below PDF.

    https://www.vanguardinvestor.co.uk/content/documents/legal/vanguard-full-fund-costs-and-charges-201809v2.pdf

    Alex
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