Fees & Pricing for Managed Portfolio

Hi there,
I am under the managed portfolio. So far so good but I dont understand how fees are calculated. Fees are either the fees of Invest Engine or the TER of ETFs. The pricing page of the website does not help much.
For example, it seems your team is selling shares of ETFs A to buy some of ETFs B (for eg.). A and B have different TER. Adding to that, IE does that very frequently : is your team paid on commission per transaction ? In this case I would understand the urgency to balance portfolios very frequently.
Could you please explain and illustrate with an example for both type of fees ?
Thanks !

Hi Arnault. InvestEngine do not take the ETF fees. The ETF fees are deducted directly from the fund’s assets by the ETF provider and the share price reflects the performance of the ETF after these deductions. You never even know you have paid them.

Regarding IE’s managed fee, I presume if you have no cash in your account they will have to sell part of your ETF holdings to get some cash to cover their fee.

You can see what IE fees you have paid by going to the menu tab, then transactions, and then filter by “fees & corrections”.

I hope that helps :blush:

Thanks Tom, it does!
So, let’s say:
Day 1: I buy 100 GBP of ETF A at 0.15, ie. I pay 15 cents of fees
Day 2: I sell these, buy 100 GBP of ETA B at 0.3, ie. I pay 30 cents

Then, my cost is 45 cents. So I hope that that my profit from selling ETF A is at least 45 cents if I wanna break even. Am I computing it correctly? In yes, then it would be more transparent to show the costs of acquiring these ETFs each time IE buys them, and the “profit” each time they sell these ETFs no? I checked and you can’t see this option in the app.

Regardless - congrats IE, such a great app. I wanted to go ETF first for life, and you just do that. Hopefully we can have a journey together.

You don’t pay the TER when you buy the ETF. The TER is an ongoing annual charge. So an ETF with a 0.15% has 0.15% deducted pro rata every day. In the same way that you might accrue interest on a savings account for every day you have it in the account, the fund provider accrues their fees.

I’m going to make it a bit more complicated now as there is another cost you pay when buying an ETF. It is called the bid-offer spread. It is the difference between the price you can buy an ETF at and the price you can sell it at. The market maker pockets the difference (not InvestEngine). This fluctuates constantly, but to simplify it, the more popular ETFs tend to have better bid-offer spreads. This is not a fee charged by InvestEngine, but just part and parcel of trading any security on a stock exchange.

So, in your example of buying and selling ETFs daily, you should not worry about the TER, but be more concerned about constantly paying the bid-offer spread.

I am not sure if i have done a good job of explaining that, but check out this article from justETF. It does a great job of explaining the various ETF costs: https://www.justetf.com/uk/news/etf/cost-of-etfs-total-expense-ratio-ter-vs-total-cost-of-ownership-tco.html