Help me understanding the UBS GOLD ETF (AUUSI) KIID

This ETF advertises a 0.23% TER and 0.00% tracking error (USD basis). The KIID [https://www.ubs.com/2/e/kiid/KIID_CH0106027193_en_CH.pdf] has a line that is confusing me. It says there is a one off charge, before and after investment, of 3% for conversion fees. There is also a 5% that they say depends on brokers. We can ignore that one for now.

I bought the ETF on IB (AUUSI) where it is listed in CHF on EBS. The transaction fees I paid were much lower, about 0.05%. So how should I understand those fees in the KIID? Is it only when bought through UBS directly?

It’s the maximum they could charge for buying. But I guess even at UBS you wouldn’t pay those 3%.

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Are you certain? The reason it confuses me is:

  • Why would they be allowed to regulate the fee the broker may charge for conversion? And which conversion are they talking about, CHF->USD? USD->ETF?

  • Given that I bought in CHF (I didn’t see it listed in USD), I am left wondering if UBS then converts the CHF to USD, and somehow may charge 3% for this, without showing it in the tracking error or TER because the KIID is in USD? This probably does not make sense but I want to be sure!

Did you read the footnotes? Those fees are probably for the primary markets, as they mention in the footnote trading on exchange (secondary market) makes you pay only the exchange/brokers fees.

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Ah, I see… thanks!
So this still means that, although I am not directly paying - someone had to pay these fees at some point in the past, and this is more or less amortized over all the owner of the ETF over time…

I doubt the authorized participants (the people providing ETF liquidity) pay that kind of fees.

(I also doubt that in practice someone doing a primary transaction would pay that much either, it’s just a max)

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Yes it’s a max. Almost all fund factsheets have max fees of 3% to 5% but I rarely see such fees in reality. Most banks or brokers take 1% to 2%, or flat fees. Some banks or brokers even have 0 fees for redemption.

For conversion I have no idea. I think these ETFs can be physically delivered in actual gold and maybe that’s what it’s about.

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The 3 % conversion fees would be applied if for some reason unexpected the ETF has to be dissolved. This is almost never applied unless for example the company emitting the ETF goes broke or due to some embargo the fund has to be reimbursed as cash.

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