Náklady, brokeři a praxe
Hidden Costs of Investing That Eat Into Your Returns
Key takeaways
- TER is not the only cost — there are additional transaction, currency, and tax costs.
- The spread is a hidden cost on every ETF purchase and sale.
- The 15% dividend withholding tax on distributing funds eats into returns; accumulating funds are more favourable for Czech investors.
- Rebalancing too frequently generates more costs than the value it adds.
- Total cost of ownership (TCO) is a better metric than TER alone.
The total cost of investing is higher than the fund's TER alone — and overlooking this can easily cost hundreds of thousands of crowns over twenty years.
TER: the foundation, not the full story
TER (or OCF) is the annual fund management fee continuously deducted from the fund's value. For large index ETFs it runs 0.03–0.20%. That is excellent — but it is not everything. The fund itself also has internal trading costs (transaction costs) that are not included in the TER and are only visible in the fund's precise performance relative to its index (so-called tracking difference).
Spread: the silent fee on every trade
Every purchase and sale of an ETF on an exchange involves the spread — the gap between the buy and sell price. For large liquid ETFs it amounts to a fraction of a percent; for small or exotic funds it can be 0.5–1% or more. Someone who trades infrequently pays the spread rarely. Someone who reshuffles their portfolio every month pays it repeatedly.
Tax costs in the Czech Republic
In the Czech Republic you pay a 15% withholding tax on dividends paid out by distributing ETFs. An accumulating fund reinvests dividends internally and you pay tax only at the point of sale — and if you meet the three-year holding test, you pay zero. That is why accumulating funds are generally more advantageous for Czech investors than distributing ones. You can read more about this in the article on ETF taxes in the Czech Republic.
Rebalancing and its price
Regular portfolio rebalancing (returning to target allocation) is sound practice — but rebalancing too frequently generates unnecessary transaction costs and taxable events. The recommended approach is to rebalance once a year or when the allocation deviates more than five percentage points from the target.
How to find actual costs
- Compare tracking difference (available, for example, on justETF.com) — it shows how much the fund lagged behind its index.
- Check your broker's fees for buying and selling, not just the TER.
- Add the currency spread if you buy a fund denominated in EUR from a CZK account.
Only then can you see the true TCO (total cost of ownership) — and only with that can you meaningfully compare different funds and brokers. Broker selection is covered in a separate article: how to choose a broker in the Czech Republic.
FAQ
What is tracking difference and why does it matter?
Tracking difference is the gap between the fund's performance and the performance of the index it tracks. Unlike TER, it also captures the fund's internal transaction costs. A negative tracking difference (the fund outperforming the index) is rare but possible.
How large is the spread on an ETF typically?
For large liquid ETFs (S&P 500, MSCI World) the spread is usually 0.01–0.05%. For smaller or more exotic funds it can be 0.2–1% or more. You pay the spread twice — once when buying and once when selling.
Why are accumulating ETFs more favourable for Czech investors?
Distributing ETFs pay dividends on which you immediately pay 15% withholding tax. Accumulating ETFs reinvest dividends internally; tax is deferred to the point of sale, and if the three-year holding test is met, no tax is due at all.