Exchange Traded Funds "One-off Charges"
I am trying to understand a series of "one-off charges" for Exchange Traded Funds (ETFs) I have seen in a couple of funds.
For example, HSBC's MSCI Japan ETF has a 3% one-off charge "taken before or after you invest"; the charge is applicable to both entry and exit. Similarly, Pimco's Sterling Short Maturity Source ETF has also a 3% one-off charge at entry or exit. However, in the latter they add the following clarification - my emphasis:
Because the fund is an ETF, investors will typically only be able to buy or sell shares in the secondary market. The entry and exit charges outlined here are not applicable to such secondary market investors. However, secondary market investors may incur brokerage and / or transaction fees in connection with their dealings. Secondary market investors may also bear the costs of "bid-ask" spreads; meaning the difference between prices at which shares can be bought and sold.
Without going too much into the details, my understanding is that (only some?) holders of ETFs have the right to exchange an ETF share against the equivalent pool of assets underlying the ETF. I understand the charges outlined above as applicable only to this kind of transaction, i.e. a transaction whereby you exchange your ETF unit against the underlying. In Pimco's Key Investor Information, the "secondary market investors" are nothing more than your typical retail investor. Is my understanding correct?
I ask this question because I have seen a few ETF providers including this 3% charge on their ETFs whereas others do not, e.g. see iShares' MSCI Japan ETF USD, which has 0 one-off charges. I am surprised of this disparity and trying to understand it, in particular whether that 3% is applicable to a retail investor or not.
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