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.
Also read: The best performing ETFs of 2024
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.
| Fund name | Code | Type | Fee (% p.a.) | 1-yr return | 3-yr return | 5-yr return |
|---|---|---|---|---|---|---|
| Macquarie Core Australian Equity Active ETF | MQAE | ETF | 0.03% | n/a | n/a | n/a |
| Vanguard US Total Market Shares Index ETF | VTS | ETF | 0.03% | 24.15% | 12.44% | 15.06% |
| Betashares Australia 200 ETF | A200 | ETF | 0.04% | 15.26% | 9.29% | 9.09% |
| iShares S&P 500 ETF | IVV | ETF | 0.04% | 24.52% | 13.85% | 15.53% |
| iShares Core S&P/ASX 200 ETF | IOZ | ETF | 0.05% | 14.75% | 8.98% | 8.75% |
| SPDR S&P/ASX 200 | STW | ETF | 0.05% | 14.90% | 9.06% | 8.96% |
| SPDR S&P/ASX 200 ESG Fund | E200 | ETF | 0.05% | 14.62% | 9.39% | n/a |
| Vanguard Australian Shares Index ETF | VAS | ETF | 0.07% | 14.72% | 8.57% | 8.78% |
| iShares S&P Midcap ETF | IJH | ETF | 0.07% | 18.78% | 10.83% | 12.02% |
| iShares S&P Small-Cap ETF | IJR | ETF | 0.07% | 18.21% | 8.39% | 10.91% |
| Vanguard All-World ex US Shares Index ETF | VEU | ETF | 0.07% | 12.72% | 6.28% | 7.85% |
| SPDR S&P World ex Australia Carbon Control Fund | WXOZ | ETF | 0.07% | 22.27% | 10.67% | 12.74% |
| Betashares Global Shares ETF | BGBL | ETF | 0.08% | 21.48% | n/a | n/a |
| Macquarie Core Global Equity Active ETF | MQEG | ETF | 0.08% | n/a | n/a | n/a |
| iShares Core MSCI Australia ESG ETF | IESG | ETF | 0.09% | 17.18% | 7.91% | n/a |
| iShares Core MSCI World ex Australia ESG ETF | IWLD | ETF | 0.09% | 23.84% | 12.81% | 14.30% |
| SPDR S&P 500 ETF Trust | SPY | ETF | 0.09% | 24.72% | 14.03% | 15.77% |
| iShares S&P 500 AUD Hedged ETF | IHVV | ETF | 0.10% | 18.62% | 6.74% | 11.40% |
| SPDR World ex Australia Carbon Control (Hedged) Fund | WXHG | ETF | 0.10% | 18.83% | 6.46% | 10.49% |
| SPDR S&P/ASX Australian Government Bond Fund | GOVT | ETF | 0.10% | 4.25% | -3.46% | -1.37% |
| Source: ASX | Period ending: 31 July 2024 | ||||||
According to the latest data, the cheapest ETFs in Australia are now the Vanguard US Total Market Shares Index ETF and Macquarie Core Australian Equity Active ETF.
The Vanguard ETF has returned 16.6% over the 12 months to 13 August 2024, while the Macquarie Core has only been trading since May 2024.
This means the Vanguard VTS ETF has outperformed the S&P 500, which grew 19.04% in the 12 months to 13 August 2024. but trails the Nasdaq-100, which grew 21.94% in the same period.
A few averages worth noting (to 31 July 2024):
| Response | |
|---|---|
| Ad-hoc | 41.32% |
| Monthly | 29.04% |
| Yearly | 17.37% |
| Weekly | 11.38% |
| Daily | 0.9% |
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.
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%.
Source: ASX | Period ending: 31 July 2024 | SP = Structured Product, MF = Managed Fund / Active ETF, MER = Management Expense Ratio (aka fees).
| Fund name | ASX code | Type | Fee (% p.a) | 1 year total return |
|---|---|---|---|---|
| Global X Semiconductor ETF | SEMI | ETF | 0.45 | 42.06% |
| Betashares Crypto Innovators ETF | CRYP | ETF | 0.67 | 41.27% |
| Global X FANG+ ETF | FANG | ETF | 0.35 | 40.43% |
| Munro Climate Change Leaders Fund (Managed Fund) | MCCL | ETF | 0.90 | 38.59% |
| Munro Concentrated Global Growth Fund (Managed Fund) | MCGG | ETF | 0.70 | 38.38% |
| Montaka Global Extension Fund (Quoted Managed Hedge Fund) | MKAX | ETF | 1.25 | 37.02% |
| VanEck Global Listed Private Equity ETF | GPEQ | ETF | 0.65 | 37.00% |
| Betashares Geared US Equity Fund Currency Hedged (Hedge Fund) | GGUS | ETF | 0.80 | 35.50% |
| Global X Uranium ETF | ATOM | ETF | 0.69 | 35.12% |
| VanEck Australian Banks ETF | MVB | ETF | 0.28 | 34.95% |
| Betashares Financials Sector ETF | QFN | ETF | 0.34 | 32.27% |
| SPDR S&P/ASX 200 Financials ex A-REIT Fund | OZF | ETF | 0.34 | 32.23% |
| Montaka Global Equities Fund (Managed Fund) | MOGL | ETF | 1.32 | 31.94% |
| Global X Ultra Long Nasdaq 100 Complex ETF | LNAS | ETF | 1.00 | 31.20% |
| Loftus Peak Global Disruption Fund (Managed Fund) | LPGD | ETF | 1.20 | 30.94% |
| Global X US 100 ETF | N100 | ETF | 0.24 | 29.56% |
| Betashares Global Banks ETF - Currency Hedged | BNKS | ETF | 0.57 | 28.26% |
| SPDR S&P/ASX 200 Listed Property Fund | SLF | ETF | 0.16 | 28.05% |
| Betashares Japan ETF - Currency Hedged | HJPN | ETF | 0.56 | 27.63% |
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.
These are the 3 main fees you'll need to consider when investing in an ETF:
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.
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