How do ETF commissions work?

Question

Let's suppose that I live in the UK, and that I have £10000 invested in Vanguard's VUSA. This ETF has an ongoing charge of 0.07%. This, added to the 0.15% account fee, it's a 0.22% total. That means that the total cost of the mentioned investment would be £22 each year. Is it correct?

Apart from the above, I would need to take into account the commission to re-invest dividends.

Whether or not there is a commission for re-investing dividends will depend on each particular ETF, is this correct? (I mean, Vanguard might have some products in which re-investing dividends is for free, and others that don't)

Answer 1

Im assuming you’re in the UK? I’m not sure what the .15% account fee is you’re referring to but assume it’s something your brokerage firm charges?

The ETF itself has an expense ratio of .07%, which is deducted from the etf itself vs deducted from your account.

An ETF has no say regarding what fees are charged to buy or sell its shares. If there is a charge for reinvesting dividends that would be determined by the brokerage firm you’re using.

In the US it is unheard of for a firm to charge a fee to reinvest dividends. Since my response is based on the US, please add for details if i haven’t answered your question completely

Answer 2

Most investment funds fees charge according to Net asset values(NAV). I.e., your investment will rise or fall over time, the charges are based on closing asset value.

According to this UK vanguard fees page, the account fees are capped to £375 and free if the NAV is above £250,000. For the complete charges information, you should read this costs table. Dividends are no different than continuous investment. If that particular product charges additional fees, then the reinvestment will subjet to the same fees.