Edouard Dradin

03 Apr 2025

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What fees for an ETF: what you need to know before investing

ETFs (Exchange-Traded Funds) are often presented as a cost-effective and transparent investment solution. However, they can involve hidden costs that every investor should be aware of. In addition to obvious fees like the total expense ratio (TER), other, more discreet expenses can impact the profitability of your investments: spreads, brokerage fees, PFOF (Payment for Order Flow), banking fees, and even certain taxes. 

Summary

Introduction
Management fees (TER)
The spread
Brokerage fees
Banking fees
Taxes
Other costs
Easyvest's approach
Summary

Introduction 

In this article, we review all the costs associated with ETFs, from the most obvious to the most hidden, so you can invest with full awareness.

Management fees (TER): the recurring cost of ETFs 

The Total Expense Ratio (TER) is arguably the most well-known cost of ETFs. It represents the annual fee charged by the ETF issuer to manage and operate the fund. This percentage is directly deducted from the fund’s performance and covers: 

• Management fees: compensation for the company that issues and manages the ETF. 
• Administrative fees: including audit and accounting. 
• Legal and regulatory fees: related to compliance with legal and regulatory obligations. 
• Custody fees: compensation for the custodian responsible for holding the securities. 
• Reporting and publication fees: necessary for the regular distribution of information to investors. 
• Various taxes: levied depending on the fund’s jurisdiction. 
• PRIIPS and KID fees: mandatory documents for the issuer, consisting of key information about the fund. 

Note: do not confuse the management fees charged by the ETF issuer with those charged by the company managing your account. 

What is a good TER for an ETF? 

The TER of an ETF varies depending on the asset class: 

• Index equity ETFs: 0.05% to 0.40% 
• Bond ETFs: 0.10% to 0.50% 
• Thematic or sector ETFs: 0.30% to 0.80% 
• Active ETFs: up to 1% or more 

A low TER is generally preferable, but it’s not the only factor to consider. Some low-cost ETFs may generate other hidden costs (such as spreads or tracking error). 

At Easyvest, we have selected two ETFs with very low TERs to enhance our clients’ returns. Our equity ETF has an annual fee of 0.17%, while the issuer charges 0.15% per year for the bond portion. We also offer a portfolio aligned with the Paris Agreement, which has a TER of 0.20%. 

The spread: an indirect cost not to be overlooked 

The spread is the difference between the ask (buy) and bid (sell) price of an ETF. It represents a cost for entering and exiting the investment. A large spread means you pay more to buy and sell at a lower price. 

Why does the spread vary? 

• ETF liquidity: The more frequently an ETF is traded, the narrower its spread. 
• Market hours: If the ETF tracks a U.S. index but is listed in Europe, the spread may widen when the U.S. market is closed. 
• Type of underlying assets: Equity ETFs on well-known indices (e.g., S&P 500) tend to have narrower spreads than ETFs on emerging markets or low-liquidity bonds. 

Brokerage fees: a variable cost depending on your broker 

Brokerage fees are commissions charged by your financial intermediary for buying or selling an ETF. These fees depend on several factors: 

• The broker used: some online brokers offer commission-free ETFs, while others apply fixed or variable commissions. 
• The market you invest in: buying a U.S.-listed ETF may incur different fees than buying a Europe-listed one. 
• Investment amount: some brokers charge fixed fees, which can penalize small investors. 

Good to know: some brokers use Payment for Order Flow (PFOF), a method where client orders are directed to market makers who compensate the broker. This can affect order execution prices and create a hidden cost. 

Banking fees: a sometimes overlooked cost 

Banking fees can impact your profitability, especially when investing internationally. Costs to watch out for include: 

• Currency conversion fees: Buying a USD-denominated ETF with a euro account usually incurs exchange fees (between 0.1% and 1% per transaction). 
• Transfer or withdrawal fees: Some institutions charge for transferring funds to an investment account. 
• Custody fees: Some banks charge annual custody fees. 

Tip: check your bank or broker’s pricing and prefer platforms offering low-cost currency conversion. 

Taxes that can impact ETFs in Belgium 

Belgium applies several taxes that may influence your ETF investment returns. Key taxes include: 

Stock exchange transaction tax (TST) 

In Belgium, the TST applies to buying and selling ETFs listed on regulated markets. The rate depends on the ETF type: 

• 0.12% (capped at €1,300) for "accumulating" ETFs (those that reinvest dividends automatically). At Easyvest, we favor these to optimize long-term returns. 
• 1.32% (capped at €4,000) for "distributing" ETFs (those that pay out dividends). 
• Other ETFs not registered in Belgium: 0.35% (capped at €1,600). 

Note: some international brokers don’t automatically apply the TST, but you remain responsible for paying it to the Belgian tax authorities. 

At Easyvest, this tax is settled automatically. We also work to reduce transactions to optimize investment efficiency. 

Withholding tax on dividends 

If you invest in a distributing ETF, dividends are subject to a 30% withholding tax in Belgium. This is usually applied automatically by your bank or broker. 

Reynders tax on bond capital gains 

If your ETF contains more than 10% in bonds, capital gains on sale are subject to the Reynders tax—a 30% withholding. 

How to avoid it? Choose a 100% equity ETF. 

Other potential costs: hidden fees and tracking costs 

In addition to standard costs, other factors may impact ETF profitability: 

• Tracking error cost: An ETF may not perfectly track its index. If underperformance results from internal costs or poor management, this can represent an indirect cost. 
• Restructuring fees: Some ETFs change strategy or benchmark, creating rebalancing costs. 
• Inactivity or custody fees: Some brokers charge if no trades are made during a certain period. 

How are ETF fees charged? Easyvest’s approach 

At Easyvest, we simplify ETF investing by grouping all fees (excluding mandatory taxes) into a single management fee between 0.4% and 1% per year, billed monthly. Unlike traditional banks and brokers, we charge no transaction, entry, or exit fees. 

Our ETFs are carefully selected to offer the best possible tax advantage in Belgium and ensure a minimal TER, while the use of robo-advisors and the automation of certain processes allow Easyvest to provide fully transparent management, reduced fees, and personalized support to grow your wealth with complete peace of mind.

Summary: how to optimize your ETF investment costs 

To minimize ETF-related costs: 

• Choose ETFs with a low TER but watch for tracking error. 
• Compare brokerage fees and avoid brokers using PFOF. 
• Mind the spread: pick liquid ETFs and trade during optimal hours. 
• Plan for bank fees, especially exchange and custody costs. 
• Read the KID and regulatory docs to uncover hidden fees. 

ETFs remain an excellent investment vehicle, but knowing all costs helps avoid surprises and improve portfolio performance. To understand how to invest in ETFs, read our article: How to invest in ETFs in Belgium? Comprehensive guide for 2025

Want to invest in ETFs with reduced fees and an optimized approach? Discover Easyvest’s solutions and invest with confidence.
 

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