When ETF's expense fee is charged?

Question

Hi,

Let's say if I buy $1000 worth of SPY (expense ratio of 0.09%) and hold it for month (30days). How the expense fee is calculated and when I will be charged with it?

Will I be charged in an amount of $1000 * (0.09/100) * (30/365) when I sell it?

Answer 1

Actually, you never see the actual charge. It is deducted from the asset value on a daily basis.  For example SPY has net assets of about $71.6 billion.  71,600,000,000 x .001 x 1/365 = $196,164 every day.  We are not talking pocket change here.  But remember.  The securities the ETF holds are paying dividends and the dividends more than cover the expense ratio with some left over to bestow on the fund owners. In the case of SPY about 2%

Answer 2

ETF Shares are not redeemable with an applicant fund other than in creation unit aggregations. Instead, investors must buy or sell ETF shares in the secondary market with the assistance of a stock broker. In doing so, the investor will incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling. All ETF products are subject to stock market risk, which may result in the loss of principal. Prices of mid- and small-cap ETFs often fluctuate more than those of large-cap ETFs. International ETFs involve additional risks, including currency fluctuations and the potential for adverse developments in specific countries or regions. ETFs that invest in emerging markets are generally more risky than those that invest in developed countries. Sector ETFs are subject to sector risks and non-diversification risks, which may result in performance fluctuations that are more extreme than fluctuations in the overall stock market. ETFs that invest in bonds are subject to interest rate, credit, and inflation risk. *Source: Lipper, Inc.