Watch out for the hidden costs of ETFs

Exchange-traded funds tend to be much cheaper than actively-managed funds. But there can be hidden charges. Matthew Partridge explains what they are, and how you can avoid them.

We're big fans of exchange-traded funds (ETFs). Not only can they help you gain broad exposure to a market or a sector, but their charges are much lower than actively managed funds (many of which are closet indexers').

However, even within the world of ETFs, you have to watch out for hidden charges. If keeping costs down is one of your goals (and it should be), then it's worth comparing different ETFs to see which one offers the most efficient way of tracking your chosen index.

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Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri