The total cost of owning an ETF — all four charges, not just the TER

The ongoing charge is deducted from the fund's assets continuously, so you never see it as a transaction — it shows up as the fund returning slightly less than its index. It is genuinely comparable across funds, genuinely published, and genuinely small for broad index funds: the difference between a cheap global tracker and a very cheap one is often a couple of basis points, which on €10,000 is a few euros a year.

Quoting it as euros per €10,000 rather than as a percentage is worth the effort, because it makes the comparison against the other three costs honest. A 0.20% charge is €20 per €10,000 per year. Hold that figure in mind for the rest of this page, because each of the next three can exceed it comfortably.

A fund's ongoing charge is what it says it takes. Tracking difference is what it actually delivered against its index, and the two are not the same number. Securities lending revenue, tax treaty advantages and sampling decisions all push the realised gap away from the headline charge — sometimes so far that a fund beats its own index gross of fees.

That makes tracking difference the honest measure and the ongoing charge a proxy for it. It is also harder to use: it is published by the fund rather than standardised, it varies year to year, and comparing it across providers requires the same index and the same period. Where both are available, the realised difference is the number that decided what you kept.

When a company pays a dividend to a fund domiciled in another country, the company's home country withholds tax before the fund receives it. The investor never sees this happen. It is deducted inside the fund, reduces the fund's return, and appears nowhere on any statement.

The amounts are not small. US companies dominate global indices and the default withholding rate on US dividends is 30%, which an Irish-domiciled fund reduces to 15% under its treaty. On a global equity fund yielding around 2%, that treaty difference is worth roughly 30 basis points a year — comfortably more than the entire ongoing charge of most such funds. This is the single strongest reason nearly every ETF sold to European retail investors is Irish, and it is a reason almost no comparison mentions.

The first three costs belong to the fund and are the same for everyone holding it. The fourth belongs to you: commission per trade, any custody or platform fee, the currency conversion charge if you buy a listing not denominated in your account currency, and the spread you cross on the way in and out.

These behave differently from the other three. A per-trade commission is heaviest on small, frequent purchases and negligible on large infrequent ones, so the same broker is cheap for one investor and expensive for another. A fund that is free to trade at your broker can beat a cheaper fund that is not, and no amount of comparing ongoing charges will surface that.

On top of all four sits your country's tax treatment, which is not a cost of the fund at all and is frequently larger than every fund cost combined. A Dutch investor pays an annual charge on the value of the holding regardless of what it earned. An Italian one pays a stamp duty on the balance every year. A Belgian one pays a transaction tax that depends on the share class.

That is why this site quotes tax alongside cost rather than treating them as separate subjects. The question worth answering is not "which fund is cheapest" but "what does this fund cost me, here, through this broker" — and those two questions have different answers more often than not.

Is the fund with the lowest ongoing charge the cheapest to own?

Not reliably, and the exceptions are common rather than exotic. A fund a few basis points dearer can be cheaper in total if your broker lets you trade it for nothing, if it lends securities more profitably, or if it is domiciled somewhere with a better treaty rate on the dividends it receives. The ongoing charge is the most visible cost, which is not the same as the largest.

Why does fund domicile matter if I am not resident there?

Because the domicile determines what treaty the fund itself can claim on the dividends it receives, before you are involved at all. An Irish fund holding US shares recovers half the US withholding an untreatied fund would lose. That happens inside the fund, reduces or increases its return accordingly, and has nothing to do with where you live — which is why it is so easy to miss.

How do I compare a one-off trading cost against an annual one?

Divide it by the years you expect to hold. A round-trip commission of €20 on a €10,000 position is 0.2% if you hold for a year and 0.02% a year if you hold for ten — which moves it from dominating the ongoing charge to being a rounding error against it. This is why the honest comparison depends on your own holding period rather than on any property of the fund.