From Morningstar:

ETFs have become popular due to transparency, ease of trading, tax efficiency, and low costs. When choosing an ETF, it’s important to consider both holding costs and transaction costs. For long-term investors, holding costs are crucial, while transaction costs are more significant for short-term investors with large sums of money.

Commissions are a major component of ownership costs for ETFs. Other ownership costs include sampling, index portfolio turnover, and treatment of dividends. Securities lending can help offset costs for ETFs, while tracking difference and tracking error measure the performance difference between an ETF and its benchmark index.

Transaction costs for ETFs include commissions and bid/ask spreads. While ownership costs are fixed, transaction costs are incurred only during purchase or sale transactions. Some trading platforms offer low or no-cost transactions. Bid/ask spreads represent the difference between the buying and selling price offered by market makers.



Read more: ETFs, How Much do they Really Cost Me?