Investors who want to increase their returns in either superannuation or exchange traded funds (ETFs) should focus on the fees they are paying and what they are getting in return.
But while fees play a key role in the long-term success of many ETFs, it's also important to consider other factors, such as short-term and long-term performance figures and how these compare to others in the market.
This guide compares both the cheapest and best-performing ETFs to give you a broader picture of the market.
Below are the 20 cheapest ETFs on the ASX by management fees, or "management expense ratio" (MER). This is the annual fee charged by fund managers as a percentage of the assets held in the fund.
The returns shown are net, meaning fees have been removed prior to the performance figures.
Cheapest ETFs on the ASX
Fund name
Code
Type
Fee (% p.a.)
1-yr return
3-yr return
5-yr return
Vanguard US Total Market Shares Index ETF
VTS
ETF
0.03%
36.45%
15.51%
16.20%
iShares S&P 500 ETF
IVV
ETF
0.04%
36.72%
17.14%
16.68%
Betashares Australia 200 ETF
A200
ETF
0.04%
18.25%
11.29%
10.77%
SPDR S&P/ASX 200
STW
ETF
0.05%
18.64%
11.32%
10.55%
iShares Core S&P/ASX 200 ETF
IOZ
ETF
0.05%
18.28%
11.23%
10.48%
SPDR S&P/ASX 200 ESG Fund
E200
ETF
0.05%
17.91%
11.56%
n/a
iShares S&P Midcap ETF
IJH
ETF
0.07%
29.50%
11.83%
13.06%
iShares S&P Small-Cap ETF
IJR
ETF
0.07%
20.41%
6.95%
10.40%
Vanguard Australian Shares Index ETF
VAS
ETF
0.07%
18.38%
10.77%
10.56%
iShares Core Cash ETF
BILL
ETF
0.07%
4.27%
2.11%
1.54%
Betashares Global Shares ETF
BGBL
ETF
0.08%
n/a
n/a
n/a
Vanguard All-World ex US Shares Index ETF
VEU
ETF
0.08%
19.39%
7.64%
8.20%
SPDR S&P 500 ETF Trust
SPY
ETF
0.09%
38.16%
17.27%
16.93%
iShares Core MSCI Australia ESG ETF
IESG
ETF
0.09%
22.56%
n/a
n/a
iShares Core MSCI World ex Australia ESG ETF
IWLD
ETF
0.10%
36.70%
16.49%
15.04%
iShares S&P 500 AUD Hedged ETF
IHVV
ETF
0.10%
30.79%
9.04%
12.01%
Vanguard Australian Fixed Interest Index ETF
VAF
ETF
0.10%
1.60%
-1.33%
0.01%
iShares Core Composite Bond ETF
IAF
ETF
0.10%
1.46%
-1.42%
0.00%
SPDR S&P/ASX Australian Government Bond Fund
GOVT
ETF
0.10%
0.60%
-2.17%
-0.61%
Betashares Global Shares Currency Hedged ETF
HGBL
ETF
0.11%
n/a
n/a
n/a
iShares Yield Plus ETF
IYLD
ETF
0.12%
5.36%
1.96%
n/a
Source: ASX | Period ending: 31 Mar 2024
How do the cheapest ETFs compare to the market?
According to the latest data, the cheapest ETF in Australia is the Vanguard US Total Market Shares Index ETF. It returned 36.45% over the 12 months to 10 April 2024.
You can compare this favourably to the performance of the S&P 500, which grew 8.19% in the 12 months to February 2024. The Nasdaq grew 7.72% in the same period.
A few averages worth noting (to 31 March 2024):
Average ETF return over 1 year: 17.78% p.a.
Average ETF return over 3 years: 6.11% p.a.
Average ETF return over 5 years: 7.03% p.a.
Average ETF management fee (MER): 0.55% p.a.
Finder survey: How often do Australians trade stocks or ETFs?
Response
Ad-hoc
41.32%
Monthly
29.04%
Yearly
17.37%
Weekly
11.38%
Daily
0.9%
Source: Finder survey by Pure Profile of 1145 Australians, December 2023
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
How does the cheapest compare to the best?
While cheaper fees tend to correlate with above-average performance over many years, the same does not appear to be true for the top-performing funds.
If you take a look at the best performing ETFs on the Australian Securities Exchange (ASX) in 2024, you'll notice their fees aren't necessarily the cheapest. In fact, some of the highest returning funds have management fees that are well above the average of 0.55%.
20 best performing exchange traded products in 2024
Fund name
ASX code
Type
Fee (% p.a)
1 year total return
Betashares Crypto Innovators ETF
CRYP
ETF
0.67
159.88%
Global X Ultra Long Nasdaq 100 Hedge Fund
LNAS
MF
1
102.57%
Betashares Global Uranium ETF
URNM
ETF
0.69
76.31%
Global X FANG+ ETF
FANG
ETF
0.35
75.06%
Global X Semiconductor ETF
SEMI
ETF
0.57
72.85%
Betashares Geared US Equity Fund Currency Hedged (Hedge Fund)
GGUS
MF
0.8
70.96%
Global X Uranium ETF
ATOM
ETF
0.69
61.67%
Montaka Global Extension Fund (Quoted Managed Hedge Fund)
MKAX
MF
1.25
56.47%
Hyperion Global Growth Companies Fund (Managed Fund)
HYGG
MF
0.7
56.29%
Loftus Peak Global Disruption Fund (Managed Fund)
LPGD
MF
1.2
55.99%
Betashares Japan ETF - Currency Hedged
HJPN
ETF
0.56
55.16%
VanEck Global Listed Private Equity ETF
GPEQ
ETF
0.92
53.37%
Montaka Global Equities Fund (Managed Fund)
MOGL
MF
1.32
52.32%
Munro Climate Change Leaders Fund (Managed Fund)
MCCL
MF
0.9
49.68%
Betashares NASDAQ 100 ETF
NDQ
ETF
0.48
48.12%
Munro Concentrated Global Growth Fund (Managed Fund)
MCGG
MF
0.7
45.96%
Betashares S&P/ASX Australian Technology ETF
ATEC
ETF
0.48
44.57%
Betashares Metaverse ETF
MTAV
ETF
0.69
43.93%
Magellan High Conviction Trust (Managed Fund)
MHHT
MF
1.5
41.79%
Betashares NASDAQ 100 ETF - Currency Hedged
HNDQ
ETF
0.51
41.57%
Source: ASX | Period ending: 31 March 2024 | SP = Structured Product, MF = Managed Fund / Active ETF, MER = Management Expense Ratio (aka fees).
Why are some funds cheaper than others?
Exchange traded funds typically have low management fees (MER) compared to regular managed funds because most of them are index funds. Index funds passively track a stock market index, such as the S&P/ASX200 index, so they need little legwork from the fund managers and can charge cheaper fees (MER) for the service.
Because index funds mirror the returns of the stock market, they don't usually beat it, but they do perform consistently and tend to be lower risk than other kinds of funds.
On the other hand, many of the best performing ETFs are more strategic (and may be riskier) than a standard index fund. And because of this, they often charge a higher management fee for the service.
What fees do you pay when you invest in ETFs?
These are the 3 main fees you'll need to consider when investing in an ETF:
Management Expense Ratio (MER): This is the annual management fee charged by the ETF provider. It's typically charged before performance figures are released and is usually between 0.1–1% of assets.
Brokerage fee: This is the fee charged by the broker or online trading platform every time you invest in a stock or ETF. This is typically around $10 to $30 per trade.
Performance fees: Some actively managed ETFs charge a performance fee. This is typically charged as a percentage of your funds that outperform a certain benchmark.
So, do fees matter?
Fees absolutely matter, especially over many years. While ETFs are relatively new to the market, long-term studies of super fund performance show that high fees are strongly correlated with long-term performance.
Among the cheapest ETFs on the ASX, just 3 underperformed the average over 3 and 5 years. It's also worth noting that the cheapest ETFs listed above are a mix of every category – including active, passive, global, Australian, high and low-risk.
What the data above also show is that fees are not the only consideration worth thinking about – and for some investors, not the most important.
More ETF news
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.
Kylie Purcell is the senior investments editor and analyst at Finder. She has completed a Certificate of Securities and Managed Investments (RG146) and specialises in investment products including online brokers, robo-advisors, stocks and ETFs.
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