ETF Fee Impact
A tiny ETF fee sounds harmless. What happens over 20 years?
Two hypothetical funds with the same return before costs. Change their yearly costs and an order fee, and watch the gap grow.
€
€
What you put aside each month for this fund.
yrs
%
%
%
€
BuyQuarterly: the budget waits as cash and is invested every three months.
Order fee is paid
The order fee is as large as the purchase. Raise the amount or lower the fee.
Fund A ends at
€0
Fund B ends at
€0
Fund A ends higher by
€0
Fund AFund BNo costs at all
- Order fees paid to the broker (each fund)
- €0
- Amount invested (each fund)
- €0
- Fund A: lower end value than with no costs
- €0
- Fund B: lower end value than with no costs
- €0
Over time
| After | Fund A | Fund B | A minus B |
|---|
Hypothetical funds. The lower end value includes the growth the costs would have earned, so it is larger than the fees themselves.
What TER does not cover
TER is the fund’s yearly running cost, taken from the fund’s value. It does not cover the spread between buy and sell prices, broker fees, currency conversion or how closely the fund follows its index (tracking difference). Taxes are separate.
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