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There are two main types of fees associated with ETFs:
Like a mutual fund, ETFs pay management fees and operating expenses. This is called the management expense ratio (or MER). It is the yearly cost of a fund investment, whether it makes or loses money. It covers investment management, marketing, administrative costs, and fees to salespeople (called trailer fees). It’s written as a percentage of the fund’s value. While you don’t pay these expenses directly, they affect you because they reduce the fund’s returns. You may also incur other fees such as, trading costs (stock commissions and or transaction fees) to buy an ETF.
Before you invest in an ETF, read the prospectus or its summary disclosure document to understand its fees (MERs applicable to ETFs can vary between funds and generally range from 0.30% to 1% but there are also some ETFs that have fees up to 2%). You can compare fees and performance at websites like Morningstar.
Visit GetSmarterAboutMoney.ca to learn more about ETFs including, ETF fees, and other financial topics. Speak with a registered financial representative for advice that fits your personal situation.