What are some examples of explicit transaction costs that are incurred inside an ETF?

Beyond the expense ratio, ETFs incur real trading costs. These include brokerage commissions when buying or selling securities, bid-ask spreads paid on every trade, exchange fees, and regulatory transaction fees. For funds that rebalance frequently or hold less liquid securities, these costs add up. While they don't appear in the expense ratio, they directly reduce fund returns. Smart investors look beyond the published fee to understand the total cost of implementation.