ETFs are popular as they’re known for being cost-effective. But like any investment product, it’s important to understand where costs can come from, even if they aren’t always obvious.
Here’s a breakdown of the key costs you might come across when investing in ETFs through InvestEngine. Its important to note that these charges go to the ETF provider themselves and not InvestEngine.
1. Ongoing charges (Total Expense Ratio)
Every ETF has an ongoing charge- sometimes called the total expense ratio or TER, which covers the cost of managing the fund. It’s expressed as a percentage of your investment.
For example, if an ETF has a 0.20% ongoing charge, you’ll pay £2 per year for every £1,000 you invest. These fees are built into the ETF’s performance, so you won’t see them leave your account directly, but they do affect your returns over time.
At InvestEngine, we offer a wide range of low-cost ETFs. You can browse and compare our ETF range here.
2. Platform Fees
- If you use a DIY Portfolio, we don’t charge any platform or trading fees, so the ETF’s ongoing charge is the only investment cost you’ll pay.
- To keep our service free, we retain the interest on any uninvested cash in your account. This reduces the potential return you could have earned on that cash, and while there’s no explicit fee, it can be viewed as an indirect cost to you.If you choose a Managed or LifePlan Portfolio, we charge a simple annual fee of 0.25%, which covers portfolio management, monitoring, and rebalancing. You can learn more about this on our Managed Portfolios page.
3. Bid-Ask Spread
This is the small difference between the price you pay to buy an ETF and the price you’d get if you sold it immediately. It’s called the bid-ask spread and it’s a normal part of how markets work.
ETFs that are widely traded usually have tighter spreads (i.e. a smaller difference between the buy and the sell price). While InvestEngine executes trades once per day (rather than live), we aim to secure fair pricing across all orders.
Keeping costs low
InvestEngine was built to help you get more from your investments- and keeping costs low is a big part of that. Our DIY platform is commission free, and we offer high-quality, low-cost ETFs across a wide range of markets and themes.
We don’t offer leveraged or short ETFs, as these are more complex products typically designed for short-term trading. Our focus is on long-term, straightforward investing, so you can build a solid portfolio with confidence.
You can see all fund fees next to each ETF on our range page here.