I would like to understand about the expense ratio on ETFs.
Please assume that I bought 1000 quantities of NIFTYBEES at 221
So the total cost = (1000 * 221) + 263 = 2,21,263
where 263 is the total charges including brokerage, STT, SEBI charges, GST, stamp duty, etc…
This ETF is having an expense ratio of 0.04%
- How will this impact my holding?
- Will there be any other charges on my holding?
- If my holdings attract some other charges, what are the charges and when will they be charged? (
Note: I understand that brokerage, STT, SEBI charges, GST, stamp duty, etc… has to paid when selling + any taxes on the capital gain
@ShubhS9 @Prayag @Bhuvan
Expense ratio is directly adjusted in backend by ETF provider and NAV is adjusted accordingly. So to all your 3 questions, answer is NO, there will be no impact or charges just for holding your ETF.
This concept is same for all Mutual funds schemes.
Only charge I could think of your demat AMC charges which you will be charged by your broker/demat account provider.
AMC’s don’t charge expense ratio seperately. It is deducted on daily basis as tiny fractions of annual value. So everyday when AMC declares NAV, the expense ratio is adjusted in it.
Other than AMC, which is Rs. 300 + GST (charged every quarter at Rs. 75 + GST) there are no other charges.
Also, if you’re holding only one demat account against the PAN, and have holdings value less than 50,000 then AMC is not applicable, as the account is considered as BSDA (Basic Services Demat Account). You can learn more here: What is a Basic Service Demat Account (BSDA) and how can one be opened at Zerodha?
Thanks for the clarification @ShubhS9 and @Akash_Shah