Costs and fees of ETFs

Whether it's an ETF—or any other investment—we believe you should always have a clear picture of what you’re paying.

What are the costs associated with ETFs?

Once you've found ETFs (exchange-traded funds) with the market exposure you're seeking, take a close look at their costs. And remember, the relative importance of costs and fees depends on how you plan to use the ETF in pursuit of your investment goals: 

  • Trade commission

    You'll typically pay a commission each time you buy or sell an ETF—but not always. 

    Keep in mind, the smaller your investment and the more frequently you trade, the more impact these commissions will have on your bottom line.
     
    Where to look it up?

  • Operating expense ratio (OER)

    An OER is the percentage of fund assets taken out annually to cover fund expenses. For example, if you have $10,000 in an ETF with a 0.25% expense ratio, you're paying about $25 per year in expenses. It's a good idea to look at the expense ratio of an ETF before you buy. A small difference in annual expenses can add up over time.

     

    Where to look it up?

     

  • Bid/ask spread

    There is normally a difference, or spread, between the bid price (the highest price a buyer is willing to pay for a share) and the ask price (the lowest price a seller is willing to accept for a share). The amount of the spread varies from one ETF to another, and tends to be greater for ETFs with low trading volume.

     

    If you plan to hold an ETF for less than a year, this cost can matter more than the OER.

     

     

    Where to look it up?

     


What do ETFs cost with Schwab?

As an industry leader in low-cost ETF investing, we offer some of the best pricing you'll find anywhere. Here's a quick breakdown:

What do ETFs cost with Schwab?

Portfolio Management Fees
  • What you might pay elsewhere
  • What you'll pay with Schwab
  • Operating Expense Ratio 
  • What you might pay elsewhere
    Passively managed ETFs
     
    Industry asset-weighted average** OER for passively managed ETF
    0.19%1
      
      
      
    Actively managed ETFs
      
    The OERs for actively managed funds vary from fund to fund, but are typically higher than passively managed funds.
  • What you'll pay with Schwab
    Passively managed ETFs
     
    Schwab ETFs
    Asset-weighted average OER for cap-weighted Schwab ETFs1
    0.05%2
      
      
    Actively managed ETFs
      
    The OERs for actively managed funds vary from fund to fund, but are typically higher than passively managed funds.

More about ETFs


** An asset-weighted average basis is used to give more weight to funds with greater assets. It reflects where investors are actually putting their assets, and thus, better reflects the actual expenses by investors than does a simple average (weighting each fund equally).

1. Source: Morningstar, as of 2/28/21. Traditional cap-weighted ETFs include all index ETFs not categorized as strategic beta by Morningstar.

2. Charles Schwab Investment Management, Inc. (CSIM), is the investment advisor for Schwab ETFs.  Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). SIDCO is not affiliated with CSIM.

ETFs at Charles Schwab & Co., Inc. ("Schwab") which are U.S. exchange-listed can be traded without a commission on buy and sell transactions made online in a Schwab account. Unlisted ETFs are subject to a commission. Please see pricing guide for additional information.  Schwab does not receive payment to promote any particular ETF to its customers. Schwab's affiliate Charles Schwab Investment Management, Inc. ("CSIM") serves as investment advisor to the Schwab ETFs, which compensate CSIM out of the applicable operating expense ratios. The amount of the fees is disclosed in the prospectus of each ETF.



ETFs with Schwab

  • ETFs at Schwab

    Choose from 2,000+ commission-free listed ETFs1, including Schwab's low-cost market cap index ETFs.

  • Ready to start investing?

    Already have an account? Get started

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