ETF základy
What Is the Spread on an ETF and How Not to Lose Money on It
Key takeaways
- The spread (bid-ask spread) is the difference between the ask price (what you pay to buy) and the bid price (what you receive when you sell) — you pay it on every purchase and sale.
- For large liquid ETFs the spread is typically 0.01–0.05% — small, but it exists. For less liquid funds it can be 0.5% or more.
- The spread is widest right after market open and before close — buy during the middle of the trading day.
- Higher AUM and larger trading volumes = narrower spread. That is why fund size matters.
- Unlike TER, you will not see the spread in fund documents — you have to monitor it directly on the platform when placing an order.
The spread (bid-ask spread) is the difference between the ask price (at which you buy an ETF) and the bid price (at which you sell it) — it is a hidden transaction cost that you pay on every trade without it appearing as a fee.
How the spread works in practice
Imagine an ETF with a bid price of EUR 99.95 and an ask price of EUR 100.05. Spread = EUR 0.10, i.e. 0.10%. If you buy at 100.05 and immediately sell at 99.95, you lose 0.10% without any market movement. On a large investment or with frequent trading, this adds up.
How large is the spread on ETFs typically?
- Large global index ETFs (MSCI World, S&P 500): 0.01–0.05% — negligible for long-term investing.
- Mid-size ETFs: 0.05–0.20% — still acceptable, but worth monitoring.
- Small or exotic ETFs (thematic funds, narrow sectors): 0.20–1% or more — here be dragons.
When is the spread most dangerous?
The spread widens in three situations:
- Immediately after market open (first 30 minutes): market makers are cautious and widen the spread.
- Right before market close: lower liquidity at the end of the session.
- During market sell-offs or crises: spreads widen dramatically because market makers bear greater risk.
How to check the spread before buying
Directly in the broker's interface — when placing an order you will see the bid and ask prices side by side. On JustETF the "Trading" tab shows spreads for various exchanges. Definitely pay attention to which exchange you buy an ETF on — a large exchange (Xetra, LSE) usually has a lower spread than a smaller exchange.
Is spread or TER the bigger cost for a long-term investor?
It depends on trading frequency. If you buy an ETF and hold it for years, TER matters more — you pay it every year. You pay the spread only at purchase and sale. But if you trade monthly or quarterly, spread accumulates and deserves attention. More on TER in the article on TER. The complete ETF selection checklist (including spread) is in the ETF selection guide.
This article is educational in nature and does not constitute investment advice.
FAQ
What is the spread on an ETF?
The difference between the ask price (what you pay to buy) and the bid price (what you receive when you sell). When buying you pay the ask; when selling you receive the bid. The spread is a hidden transaction cost on every trade — it does not look like a fee but it reduces your return.
What spread is acceptable?
For large global index ETFs the spread is typically 0.01–0.05% — negligible for long-term investing. Exotic or thematic funds can have spreads of 0.5% or more. Always check the spread before buying in the broker interface or on JustETF.
When is the spread widest?
Right after market open and just before close, when liquidity is lower. Also during periods of market nervousness or sell-offs. Buy during the calm part of the trading day — approximately 10:00 to 15:30 CET for European exchanges.
Is the spread or TER the bigger cost for a long-term investor?
TER. You pay it every year throughout the entire holding period. You pay the spread only twice — on purchase and on sale. Over a 10-year horizon, the annual TER matters far more than a one-time spread on a large liquid fund.