swing trade ETFs

[ihomestore]

Hi,

I heard some people swing trading ETFs. Since ETF is a fund which charges a fee, I do not know whether you need to pay the expense ratio if people swing trade ETFs. So I toss out this question here for the wisdom of this group.

Suppose I buy one ETF on Monday and sell it on Friday. Do I need to pay the yearly expense ratio besides commissions?

Any thoughts?

 

[modeca]

Hi,

I heard some people swing trading ETFs. Since ETF is a fund which charges a fee, I do not know whether you need to pay the expense ratio if people swing trade ETFs. So I toss out this question here for the wisdom of this group.

Suppose I buy one ETF on Monday and sell it on Friday. Do I need to pay the yearly expense ratio besides commissions?

Any thoughts?

AFAIK the fee is included in the price. I own some iShares and they can be bought and sold just like regular stocks - I'm not aware of any additional costs. By all means do some more research but this is my understanding. Hope this helps.

 

[cronian]

ETF's differ in how they collect the fee, but I think most of the big ones take it out of the dividends. As far as transaction costs, you just pay your usual commission.

Consider this question. Is it possible to exploit an arbitrage opportunity by shorting ETF and buying its components.

 

[roguetrader]

Suppose I buy one ETF on Monday and sell it on Friday. Do I need to pay the yearly expense ratio besides commissions?

In general no, I can't speak for all etf's but in general any fees associated with an etf come out of the dividend, buying and selling in the short term simply results in transaction costs just like a company stock.

Consider this question. Is it possible to exploit an arbitrage opportunity by shorting ETF and buying its components.

I don't really see how that would work, an etf is not driven by supply and demand in the same way that a company stock is, the price of an etf will rise and fall relative to it's component movements regardless of the demand for the etf. To give an example, say the $SOX (semiconductors) was rising rapidly, and for some bizarre reason no one wanted to buy SMH (semiconductor tracking stock) the price of SMH would still rise since its price is a product of its components and their weighting.

 

[cronian]

I don't really see how that would work, an etf is not driven by supply and demand in the same way that a company stock is, the price of an etf will rise and fall relative to it's component movements regardless of the demand for the etf. To give an example, say the $SOX (semiconductors) was rising rapidly, and for some bizarre reason no one wanted to buy SMH (semiconductor tracking stock) the price of SMH would still rise since its price is a product of its components and their weighting.

That was the basic point I was trying to make.

 

[roguetrader]

That was the basic point I was trying to make.

Sorry mate. it seemed like a genuine and unrelated question, since additional fee or not wouldn't create arbitrage.