Posted: 2/4/2013 9:32:53 PM EDT
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Men, I have a question if you don't mind helping out an investment newbie. I am invested in Proshares, iShares, and Rydex ETFs. I read the prospectuses, and they have annual operating expenses ranging from 0.07% to 1.7%. How do I pay these annual expenses? I have a TradeKing online trading account that I bought into them with. Will my online broker, TradeKing, send me an email or a bill, or will each company contact me, or do I have to contact them somehow?
Update: I've been researching investment for hours today. Apparently from what I've read on the internet, an ETF's fees are siphoned off from the income they make, and I don't actually have to write them a check. It's all taken care of transparently. Is that correct? What about when the "distribute capital gains"? Is that just when they pay a dividend? And, what about portfolio turnover? If there is a 5% portfolio turnover per year, do I have to worry about calculating capital gains tax on that, or is that all taken care of behind the scenes by the ETF management company? |
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All fees, expenses, and gains within the ETF are taken care of by the fund managers. You don't see it, and it all stays behind the scenes. If does affect the return on the ETF, so it's important to keep an eye on the fund's expenses, and turnover when buying/selling ETFs (or mutual funds).
The only taxes you'll be responsible for are your personal income taxes on the gains made from buying and selling the fund, or on the dividends that are paid out. Basically, anything that goes on inside the fund is not your responsibility. Anything that goes on within your brokerage account (buying/selling/dividends) are your responsibility. At the end of the year, your brokerage will send you the forms needed with all your tax information on them. |