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What are fund charges?
What are fund charges?
Written by Help
Updated over a week ago

Based on your risk profile, preferences and investment focus, our portfolio and risk management algorithms scan a universe of hundreds of ETFs to build your unique portfolio. These funds come from a number of well-known providers including Blackrock, Vanguard and others, who charge service fees for their products.

Fund charges usually range from 0.07% to 0.75% per annum. At the moment, on average these funds have total expense ratios (TER) of 0.25% p.a. and these costs are deducted directly from the fund’s assets and are thus included in the price of the ETF.

Consider the following example:

You own 1 share of an ETF whose current net asset value is £1,000,000. There are 100,000 outstanding shares of this ETF in the market and the TER is 0.20% per annum.

Usually the TER is calculated and accrued daily, which means that the fund provider will use an equivalent daily TER and deduct this percentage from the fund's net asset value every day. Please note that the financial year is generally based on a 360-day calendar.

(1 + 0.20%) ^ (1 / 360) - 1 = 0.00056%
£1,000,000 x (1 - 0.00056%) = £999,994.40

For you personally, this means that the value of your share will decrease slightly.

£1,000,000 / 100,000 = £10.00
£999,994.40 / 100,000 = £9.999944

As these costs are directly incurred by the provider, they will not show up on your account with Exo Investing. However, they do affect your return since they are deducted at source.

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