The cheapest ETFs on the ASX

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

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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.

This guide compares both the cheapest and best-performing ETFs to give a broader picture of the market.

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Below are the 20 cheapest ETFs on the ASX to date (Jan 2021) 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 ETFVTSETF0.034.44%14.55%15.59%
iShares S&P 500 ETFIVVETF0.041.45%13.66%14.89%
Betashares Australia 200 ETFA200ETF0.07-2.36%n/an/a
iShares Core Cash ETFBILLETF0.070.31%1.22%n/a
iShares S&P Small-Cap ETFIJRETF0.075.94%10.51%14.25%
iShares S&P Midcap ETFIJHETF0.072.56%9.79%13.05%
iShares Core MSCI World All Cap ETFIWLDETF0.09-0.30%9.63%n/a
SPDR S&P 500 ETF TrustSPYETF0.091.71%13.88%14.93%
iShares Core S&P/ASX 200 ETFIOZETF0.09-2.58%8.11%11.08%
Vanguard All-World ex US Shares Index ETFVEUETF0.090.56%5.36%9.44%
iShares S&P 500 AUD Hedged ETFIHVVETF0.1010.02%8.97%15.05%
Vanguard Australian Shares Index ETFVASETF0.10-1.58%8.45%11.33%
iShares Yield Plus ETFIYLDETF0.12n/an/an/a
iShares Core MSCI World All Cap (AUD Hedged) ETFIHWLETF0.127.17%6.29%n/a
iShares Enhanced Cash ETFISECETF0.120.54%1.42%n/a
SPDR S&P/ASX 200 ESG FundE200ETF0.13n/a%n/an/a
SPDR S&P/ASX 200STWETF0.13-2.25%%8.08%11.10%
iShares Core Corporate Bond ETFICORETF0.15n/an/an/a
Perth Mint GoldPMGOLDSP0.153.21%13.41%8.98%
iShares Core Composite Bond ETFIAFETF0.151.44%5.19%4.02%
Source: ASX | Period ending: 31 January 2021

How do the cheapest ETFs compare to the market?

The cheapest ETFs shown above delivered mix returns in 2020. The fund with the lowest fees on the market, Vanguard's US Total Market Shares Index (VTS) returned 4.44% over the 12 months to January 2021.

However, 2020 was an unusual year for the stock market. The dramatic crash in March was followed by an almost as dramatic recovery. Fast forward just six months and most of these funds have recovered well above their pre-March levels.

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%

Choose an ETF broker to start investing

Name Product Brokerage on AU ETFs Inactivity fee Markets
eToro (global stocks)
N/A
US$10 per month if there’s been no login for 12 months
Global shares, US shares, ETFs
Zero brokerage share trading on US, Hong Kong and European stocks with trades as low as $50.
Join the world’s biggest social trading network when you trade stocks, commodities and currencies from the one account.
IG Share Trading
Finder Award
IG Share Trading
AUD $8 or 0.1%
$50 per quarter if you make fewer than three trades in that period
ASX shares, Global shares
$0 brokerage for US and global shares plus get an active trader discount of $5 commission on Australian shares.
Enjoy some of the lowest brokerage fees on the market when trading Australian shares, international shares, plus get access to 24-hour customer support.
Superhero share trading
AUD $0
No
ASX shares, US shares, ETFs
Australia’s lowest-cost broker for ASX shares and ETFs.
Pay zero brokerage on US stocks and all ETFs and just $5 (flat fee) to trade Australian shares from your mobile or desktop.
CMC Markets Stockbroking
AUD $11 or 0.1%
No
ASX shares, Global shares, mFunds, ETFs
$0 brokerage on global shares including US, UK and Japan markets.
Trade up to 9,000 products, including shares, ETFs and managed funds, plus access up to 15 major global and Australian stock exchanges.
Bell Direct Share Trading
Finder AwardExclusive
Bell Direct Share Trading
AUD $15
No
ASX shares, mFunds, ETFs
⭐ Finder Exclusive: Get 5 free stock trades and unlimited ETF trades until July 31, 2021 when you join Bell Direct.
Bell Direct offers a one-second placement guarantee on market-to-limit ASX orders or your trade is free, plus enjoy extensive free research reports from top financial experts.
Saxo Capital Markets (Classic account)
AUD $6.99
No
ASX shares, Global shares, Forex, CFDs, Margin trading, Options trading, ETFs
Access more than 3,000 ETFs from 30+ exchanges worldwide
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Compare up to 4 providers

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. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

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 2020, 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 Asia Technology Fund – has above average fees of 0.67%.

20 best performing exchange traded products in 2021
Fund nameASX codeTypeFee (% p.a)1 year total return
BetaShares Asia Technology Tigers ETFASIAETF0.6773.01%
ETFS Battery Tech & Lithium ETFACDCETF0.8258.72%
ETFS S&P Biotech ETFCUREETF0.4543.60%
BetaShares Global Robotics and Artificial Intelligence ETFRBTZETF0.5737.13%
ETFS ROBO Global Robotics and Automation ETFROBOETF0.6935.56%
Platinum Asia Fund (Quoted Managed Hedge Fund)PAXXMF1.134.60%
iShares MSCI South Korea ETFIKOETF0.5933.44%
iShares Asia 50 ETFIAAETF0.532.55%
VanEck Vectors China New Economy ETFCNEWETF0.9529.81%
VanEck Vectors FTSE China A50 ETFCETFETF0.7229.64%
ETFS Physical SilverETPMAGSP0.4928.47%
ETFS Morningstar Global Technology ETFTECHETF0.4524.67%
BetaShares Global Cybersecurity ETFHACKETF0.6724.25%
BetaShares NASDAQ 100 ETFNDQETF0.4824.19%
BetaShares Global Gold Miners ETF - Currency HedgedMNRSETF0.5721.32%
Vanguard FTSE Asia Ex-Japan Shares Index ETFVAEETF0.419.94%
eInvest Future Impact Small Caps Fund (Managed Fund)IMPQMF0.9919.84%
WCM Quality Global Growth Fund (Quoted Managed Fund)WCMQMF1.3518.61%
Intelligent Investor Ethical Share Fund (Managed Fund)INESMF0.9718.42%
BetaShares Strong Australian Dollar Fund (Hedge Fund)AUDSMF1.3818.27%
Source: ASX | Period ending: 31 January 2021 | 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.

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.

For example, the best performing ETF of 2019, the 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's 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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