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Buying an ETF well

Buying an ETF is buying a share. A few habits keep the hidden costs small.

Watch the spread

An ETF’s spread is widest when the market has just opened and when the markets of the shares inside are closed. A fund of US shares is usually cheapest to trade in the European afternoon, when New York is open too.

Use a limit

Exchanges publish a live estimate of what each ETF’s holdings are worth (the iNAV). A limit order close to it keeps you from paying a bad price on a quiet day.

Currency of the listing

A world fund can be listed in euros, dollars or pounds. The listing currency changes nothing about what you own: the fund still holds US, Japanese and European shares. It only decides whether you exchange money to buy it.

One ticker per exchange

The same fund may have a different ticker on each exchange. The ISIN stays the same everywhere, so search by ISIN. Buying where it trades most often gives the smallest spread.

Key takeaways

  • Trade when the markets inside the fund are open.
  • A limit order near the iNAV avoids bad prices.
  • The listing currency does not change your currency risk.