The Best Low-Fee ETFs in Australia (Updated Monthly)
When it comes to investing in ETFs, fees matter more than most investors realise. Over the long term, even small differences in management fees can have a significant impact on your returns. In this guide, we'll explore the lowest fee ETFs available on the ASX and explain why keeping costs low is one of the most important principles of successful long-term investing.
Why ETF Fees Matter
Management fees, also known as the Management Expense Ratio (MER), are charged annually as a percentage of your investment. While a 0.1% difference might seem small, over 20 or 30 years, it can significantly erode your returns.
For example, if you invest $100,000 in an ETF with a 0.1% fee versus one with a 0.5% fee, the difference compounds over time. After 30 years, assuming 7% annual returns, the lower fee ETF could leave you with tens of thousands of dollars more.
The key principle here is simple: all else being equal, lower fees mean higher returns. This is why many experienced investors prioritise cost when selecting ETFs.
Current Lowest Fee ETFs
Based on the latest data from the ASX, here are the ETFs with the lowest management fees available to Australian investors:
Current Lowest Fee ETFs
| ETF | Name | Fee | FUM | Provider |
|---|---|---|---|---|
| MQAE | Macquarie Core Australian Equity Active ETF | 0.03% | $804.9M | Macquarie |
| VTS | Vanguard US Total Market Shares Index ETF | 0.03% | $6.5B | Vanguard |
| A200 | Betashares Australia 200 ETF | 0.04% | $8.5B | Betashares |
| A300 | Global X Australia 300 ETF | 0.04% | $9.0M | Global X |
| IVV | iShares S&P 500 ETF | 0.04% | $13.2B | iShares |
| VEU | Vanguard All-World ex US Shares Index ETF | 0.04% | $5.1B | Vanguard |
| E200 | SPDR S&P/ASX 200 ESG ETF | 0.05% | $246.9M | StateStreet |
| IOZ | iShares Core S&P/ASX 200 ETF | 0.05% | $7.7B | iShares |
| STW | SPDR S&P/ASX 200 ETF | 0.05% | $6.1B | StateStreet |
| BILL | iShares Core Cash ETF | 0.07% | $1.1B | iShares |
| IJH | iShares S&P Midcap ETF | 0.07% | $484.2M | iShares |
| IJR | iShares S&P Small-Cap ETF | 0.07% | $788.8M | iShares |
| VAS | Vanguard Australian Shares Index ETF | 0.07% | $21.9B | Vanguard |
| WXOZ | SPDR S&P World ex Australia Carbon Aware ETF | 0.07% | $647.8M | StateStreet |
| BGBL | Betashares Global Shares ETF | 0.08% | $3.3B | Betashares |
Understanding Fee Structures
ETF fees typically include:
- Management Fee (MER): The annual fee charged by the fund manager
- Indirect Costs: Trading costs, custody fees, and other operational expenses
- Buy/Sell Spreads: The difference between buy and sell prices (usually minimal)
When comparing ETFs, the management fee is the most transparent and comparable metric. However, it's worth noting that some ETFs may have additional costs that aren't immediately obvious, so always read the Product Disclosure Statement (PDS) before investing.
Average Fees Across the Market
The average management fee across all Australian ETFs is 0.53% per annum.
This gives you context for understanding whether a particular ETF's fee is competitive. Generally speaking, broad market index ETFs tend to have lower fees than specialised or actively managed ETFs.
Fee Comparison by Provider
Different ETF providers have different fee structures. Some providers, like Vanguard and iShares, are known for their low-cost index funds, while others may charge higher fees for specialised strategies.
| Provider | Average Fee |
|---|---|
| The Perth Mint | 0.15% |
| StateStreet | 0.20% |
| Vanguard | 0.24% |
| ETF Shares | 0.26% |
| iShares | 0.26% |
| PIMCO | 0.29% |
| Global x | 0.32% |
| DFA | 0.36% |
| Morningstar | 0.39% |
| JPMAM / Perpetual | 0.42% |
How Fees Have Changed Over Time
The Australian ETF market has become increasingly competitive, with fees generally trending downward over the past decade. This is great news for investors, as lower fees mean more of your money stays invested and working for you.
Choosing the Right Low-Fee ETF
While fees are important, they shouldn't be the only factor in your decision. Consider:
- Investment Objective: Does the ETF match your investment goals?
- Diversification: Does it provide the exposure you're seeking?
- Liquidity: Can you buy and sell easily?
- Performance: While past performance doesn't guarantee future results, it's worth reviewing
- Fees: Lower is generally better, all else being equal
Long-Term Investment Perspective
When building a long-term investment portfolio, keeping fees low is one of the few things you can control. Market returns are unpredictable, but fees are certain. By choosing low-fee ETFs, you're giving yourself the best chance of maximising your returns over time.
Remember, investing is a marathon, not a sprint. Small differences in fees compound significantly over decades, making cost-effective investing one of the most powerful tools in your investment toolkit.
Conclusion
The best low-fee ETFs offer Australian investors a cost-effective way to build diversified portfolios. By prioritising fees alongside other important factors like diversification and investment objectives, you can maximise your long-term returns.
When selecting ETFs, always:
- Compare fees across similar products
- Read the PDS to understand all costs
- Consider your long-term investment horizon
- Remember that lower fees generally mean higher returns over time
For more detailed information on specific ETFs, visit their individual pages on our website, where you can see current fees, performance data, holdings, and more.
Important Disclaimer: The information on this website is general financial advice only and is issued by The Rask Group Pty Ltd. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire any financial product. If you don't know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Financial Services Guide before using this website.