Question about index funds...

[gopunk]

vanguard s&p 500

am i being charged the ira custodial fee even if i bought shares through ameritrade (and not through vanguard's brokerage service)? what goes into the "expense ratio" then (since this is listed as an "other fee")?

thanks

 

[AccruedExpenditure]

Someone needs to keep the index fund accurate and reflective of the S&P... yes you are paying for management overhead.

 

[FeathersMcGraw]

The fees listed on Vanguard's site are Vanguard's alone and don't reflect any fees paid to other organizations for the sale or purchase of Vanguard's products. Given that Vanguard's no-load funds charge neither purchase nor redemption fees, I'm not sure why you'd use a third-party to buy them.

I believe the expense ratio is the percentage of fund assets which is used in the maintenance of the fund and is just a metric, rather than a direct expense to be paid by fund holders (that is, Vanguard does not deduct .18% of your assets every year for holding the fund), although a high expense ratio does mean that the fund management must work harder to produce a return (since their costs reduce the amount of capital they have to work with). Vanguard does charge flat account maintenance fees (I think it's $10 annually, paid quarterly) unless your account exceeds a certain threshold, however.