How do ETF fees work?

Most ETFs charge an expense ratio, which is an annual percentage fee that covers management and operating costs. You don't usually see a fee charged to your account directly; it's typically reflected in the ETF's performance over time.

Beyond the expense ratio, your real-world cost can include trading spreads and any commissions your broker charges. Spreads matter more for less liquid ETFs.

When comparing similar ETFs, small fee differences can add up over years. It's also worth checking tracking difference, because an ETF with a low fee can still lag if it tracks poorly or has higher hidden frictions.