Funds & wrappers
Transaction costs
The trading costs a fund incurs inside the portfolio, on top of its stated expense ratio.
How it works
Every trade a fund makes incurs spreads, commissions, taxes and market impact. These are paid from fund assets and are not part of the ongoing charge.
High-turnover funds can incur transaction costs comparable to their management fee, which is why turnover is worth checking.
Related terms
- Expense ratioThe annual percentage of your money a fund takes to cover its running costs.
- Portfolio turnoverHow much of a fund’s portfolio is bought and sold in a year.
- SlippageThe difference between the price you expected and the price you actually got.
- Bid-ask spreadThe gap between the highest price anyone will pay and the lowest price anyone will accept.
Mentioned in
More in Funds & wrappers
- Active management
- Target-date fund
- Active share
- Synthetic ETF
- Cash drag
- Private equity
- Distribution
- Premium and discount
All 25 Funds & wrappers terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.