Yeah.
How the AMCs charge expenses for ETFs, really seems to be a puzzle.
I know ETFs are just MFs which can be traded on the exchange.
But, with Mutual funds, it is very clear how they charge for the expenses, because we deal directly with the mutual fund AMC when we buy or sell units, and the money directly goes to the AMC, and we always buy/sell at the EOD NAV which is calculated after accounting for the expenses.
But when it comes to ETFs, we are probably dealing with 3 parties, the retail investors, market makers and the AMC
And i don’t get how they charge for the expenses, when it is very much possible that both the buyer and the seller are retail investors.
The AMC can charge me, only if I directly pay them right? if the transaction is between 2 retail investors, how does the AMC come into this picture, and how does it charge, if it doesn’t receive the money directly?
I did come across this thread relating to ETF expense ratio, but didn’t get any clarity as to how the expenses actually get charged in case of an ETF.
Wonder how ETFs charge for expenses, when the transaction is taking placing between retail investors (although not always), especially when the transaction is taking place at market price and not necessarily at the NAV of the underlying assets.