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The cheapest ETFs on the ASX in 2020

The cheapest ETF has an annual fee of 0.03% with average returns of 17% over five years.

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Must read: Looking for the cheapest ETF?

There is no single cheap ETF that suits every borrower. While the lowest fees make investing cheaper there are so many other factors you need to look at including other fees and future changes. Keep in mind that we may not compare every product in the market, but we hope that our tools and information will allow you to better compare your options.

There's been a lot of focus in the last couple of years on the importance of low fees when it comes to investment funds like superannuation and exchange traded funds (ETFs).

While fees play a key role in the long-term success of many ETFs, it's also to important to consider other factors, such as short-term and long-term performance figures and how these compare to others in the market.

Zero brokerage ETF offer

Superhero share trading

AUD 0

Standard brokerage - Australian ETFs

Zero brokerage ETF offer

Pay zero commissions when you invest in Australian ETFs and trade ASX stocks with a $5 flat fee.

  • Zero brokerage for Australian ETFs
  • Cheap $5 flat fee for ASX stocks
  • Low $100 minimum investment
  • No monthly fee for basic account
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Important: Share trading carries risk of capital loss.

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Below are the 20 cheapest ETFs on the ASX to date (Dec 2019) 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 nameCodeTypeFee (% p.a.)1-yr return3-yr return5-yr return
Vanguard US Total Market Shares Index ETFVTSETF0.0331.82%15.54%17.33%
iShares S&P 500 ETFIVVETF0.0432.28%16.02%17.77%
Betashares Australia 200 ETFA200ETF0.0724.36%n/an/a
iShares Core Cash ETFBILLETF0.071.52%n/an/a
iShares S&P Small-Cap ETFIJRETF0.0723.41%9.25%15.10%
iShares S&P Midcap ETFIJHETF0.0728.12%10.24%14.65%
iShares Core MSCI World All Cap ETFIWLDETF0.0927.93%12.79%n/a
iShares Core S&P/ASX 200 ETFIOZETF0.0925.19%11.50%9.72%
Vanguard All-World ex US Shares Index ETFVEUETF0.0922.21%11.12%9.19%
SPDR S&P 500 ETF TrustSPYETF0.0931.47%15.35%n/a
iShares S&P 500 AUD Hedged ETFIHVVETF0.1029.98%13.87%n/a
Vanguard Australian Shares Index ETFVASETF0.1025.14%11.62%9.78%
iShares Core MSCI World All Cap AUD Hedged ETFIHWLETF0.1225.68%11.16%n/a
iShares Enhanced Cash ETFISECETF0.121.77%n/an/a
Perth Mint GoldPMGOLDSP0.1520.68%10.57%8.47%
UBS IQ MSCI Australian Ethical ETFUBAETF0.1724.51%12.00%n/a
Vanguard Ethically Conscious International Shares Index ETFVESGETF0.1830.09%n/an/a
Vanguard MSCI Index International Shares ETFVGSETF0.1829.13%13.79%n/a
UBS IQ Cash ETFMONYETF0.181.46%n/an/a
Betashares Australian High Interest Cash ETFAAAETF0.181.69%1.92%2.24%
Source: ASX | Period ending: 31 December 2019

How do the cheapest compare to the market?

The cheapest ETFs shown above delivered impressive figures in 2019. The fund with the lowest fees on the market, Vanguard's US Total Market Shares Index (VTS) returned 31.8% in 2019 alone.

However, 2019 was an especially strong year for the ETF market, with 60% of all ETFs delivering returns of more than 20%. You can check out the average figures below to start comparing.

A few averages worth noting (to 31 December 2019):

  • Average ETF return over 1 year: 20.54% p.a.
  • Average ETF return over 3 years: 9.46% p.a.
  • Average ETF return over 5 years: 7.44% p.a.
  • Average ETF management fee (MER): 0.49%

While 16 out of 20 of the lowest cost funds beat the average returns over one year, that trend increases over a longer time frame, with all but one fund under-performing over five years.

Choose an ETF broker to start investing

Data indicated here is updated regularly
Name Product Brokerage on AU ETFs Inactivity fee Markets
Superhero share trading
AUD 0
No
ASX shares
Pay zero brokerage on all Australian ETFs.
Trade ASX stocks with a flat $5 commission fee and a low minimum investment of just $100.
IG Share Trading
Finder Award
IG Share Trading
AUD 8 or 0.1%
AUD 50 per quarter if you make fewer than three trades in that period
ASX shares, Global shares, Forex, CFDs, Margin trading
Brokerage discount: $5 on Australian shares for active traders & $0 commission on US and global shares
Enjoy some of the lowest brokerage fees on the market when trading Australian shares, international shares, forex and CFDs, plus get access to 24-hour customer support.
eToro Share Trading (US stocks)
N/A
USD 10 per month if there’s been no login for 12 months
Forex, CFDs, US shares
Zero brokerage share trading on US stocks with trades as low as $50.
Note: This broker offers CFDs which are volatile investment products and most clients lose money trading CFDs with this provider.
Join the world’s biggest social trading network when you trade stocks, commodities and forex from the one account.
CMC Markets Stockbroking
AUD 11 or 0.1%
No
ASX shares, Global shares, Forex, CFDs, Margin trading, Options trading, mFunds
$0 brokerage on global shares including US, UK and Japan markets.
Trade up to 9,000 products, including shares, managed funds, forex, commodities and cryptocurrencies, plus access up to 15 major global and Australian stock exchanges.
SelfWealth Share Trading (Basic account)
AUD 9.5
AUD 0
ASX shares
Trade ASX-listed shares for a flat fee of $9.50, regardless of the trade size.
New customers receive free access to Community Insights with SelfWealth Premium for the first 90 days. Follow other investors and benchmark your portfolio performance.
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Important: Share trading can be financially risky and the value of your investment can go down as well as up. Standard brokerage fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares.

How do the cheapest compare to the best?

While cheaper fees tends to correlate with above average performance over many years, the same does not appear true for the top performing funds.

If you take a look at the best performing ETFs on the Australian Securities Exchange (ASX) in 2019, you'll notice their fees aren't necessarily the cheapest. In fact, many of the highest returning funds have management fees that are well above the average of 0.49%.

Of those 20 cheapest funds listed above, none are featured among the best performers list of 2019 – while 4 are featured in the worst performing list. Meanwhile, last year's highest performing ETF – the BetaShares GGUS fund – has fees of 0.80%, much higher than the average.

20 best performing exchange traded products in 2019
Fund nameASX codeTypeFee (% p.a)1 year total return
BetaShares Geared US Equity Fund Currency Hedged (Hedge Fund)GGUSMF0.8070.50%
BetaShares Geared Australian Equity Fund (Hedge Fund)GEARETF0.8055.25%
ETFS Physical PalladiumETPMPDSP0.4951.42%
BetaShares Global Gold Miners ETF - Currency HedgedMNRSETF0.5750.99%
VanEck Vectors Gold Miners ETFGDXETF0.5345.58%
VanEck Vectors China New Economy ETFCNEWETF0.9540.02%
BetaShares NASDAQ 100 ETFNDQETF0.4839.66%
ETFS Morningstar Global Technology ETFTECHETF0.4539.15%
AMP Capital Global Infrastructure Securities Fund (Unhedged) (Managed Fund)GLINMF0.8538.64%
UBS IQ Morningstar Australia Dividend Yield ETFDIVETF0.3037.59%
UBS IQ MSCI USA Ethical ETFUBUETF0.2037.48%
BetaShares Global Sustainability Leaders ETFETHIETF0.5936.94%
VanEck Vectors MSCI World Ex-Australia Quality ETFQUALETF0.4036.91%
VanEck Vectors Morningstar Wide Moat ETFMOATETF0.4936.84%
BetaShares Asia Technology Tigers ETFASIAETF0.6736.05%
ETFS S&P Biotech ETFCUREETF0.4535.55%
BetaShares Global Quality Leaders ETFQLTYETF0.3535.12%
VanEck Vectors ChinaAMC A-Share ETFCETFETF0.7234.03%
iShares MSCI Taiwan ETFITWETF0.5933.75%
WCM Quality Global Growth Fund (Quoted Managed Fund)WCMQMF1.3533.63%
Source: ASX | Period ending: 29 December 2019 | 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 are index funds. Index funds passively track a stock market index, such as the S&PASX200 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, the don't usually beat it, but they do perform consistently and tend to be lower risk than other kinds of funds.

Hence, many of the best performing ETFs are more strategic or riskier than a standard index fund. And because of this, they often charge a higher management fee for the service.

For example, the best performing ETF, BetaShares Geared US Equity Currency Hedged fund (GGUS), is an actively managed fund that combines both debt and equity assets. Although it returned an enormous 70% in 2019, it is a much riskier investment than most other listed funds in Australia.

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What fees do you pay when you invest in ETFs?

These are the two 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.

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 1 underperformed the average over 5 years while all but 2 of the 15 funds outperformed over 3 years. It's also worth noting that the cheapest ETFs listed above are a mix of every category – including active, passive, global, Aussie, high and low-risk.

What the data above does show is that fees are not the only consideration worth thinking about – and for some investors, not the most important.

To read more on the ETF market, check out the best and worst ETFs of 2019 or our guide to investing in exchange traded funds.

More ETF news

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