ETF's and their fees

boomsmitty · 15 April 2019 at 6:57PM

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

masonic · 15 April 2019 at 7:21PM

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 · 16 April 2019 at 1:30AM

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

ETF's and their fees

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