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I'm reading the prospectus for an ETF I've recently purchased. It states:

fees paid directly from your investment

I understand how this works for the OCF. However, there are 3 further fees for this ETF:

  1. Cash Creation Fee

  2. Cash Redemption Fee

  3. Custody Transaction Fee and Basket Customisation Fee

How are these fees applied for the ETF?

Are they already factored into the quoted price on the stock exchange? (I.e. is the quoted price the NAV minus fees 1, 2 and 3?)

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The ETF price quoted on the stock exchange is in principle not referenced to NAV. The fund administrator will calculate and publish the NAV net of all fees, but the ETF price you see is determined by the market just like for any other security.

Having said that, the market will not normally deviate greatly from the NAV of the fund, so you can safely assume that ETF quoted price is net of relevant fees.

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  • it is probably worth noting that the quoted price will not deviate from the nav because the fund manager will increase/decrease outstanding shares when it does. unless it is a cef, which is a bit more complicated.....
    – teldon james turner
    Commented Mar 16, 2016 at 20:29
  • So the holders of ETF are paying the fees indirectly because the ETF is worth less than it would be without fees due to having less underlying assets than it would have without fees?
    – mastov
    Commented Jun 25, 2018 at 12:28

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