Also read: The best performing ETFs of 2024
Best low cost ETFs on the ASX
With annual fees from 0.03% p.a. and average annual returns up to 19.51% (over 5 years), these ETFs let you cheap out on the fees, not the returns.
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 the overall performance of the fund that matters most, especially in terms of how it compares to the rest of the market.
This guide compares both the cheapest and best-performing ETFs to give you a broader picture of the market, as well identifying the best-performing low cost ETFs that are available on the Australian Securities Exchange (ASX).
What is the best low cost ETF on the ASX?
According to the latest data, the best low cost ETFs in Australia are:
- SPDR S&P 500 ETF Trust (ASX: SPY) - 14.86%
- iShares S&P 500 ETF (ASX: IVV) - 14.75%
- Vanguard US Total Market Shares Index ETF (ASX: VTS) - 13.32%
This list is based on the performance of ASX ETFs over the last 3 years. To be considered "low cost", an ETF must have a management fee of 0.10% or less.
Low cost ETFs on the ASX
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 | 37.13% | 12.92% | 15.95% |
| Betashares Australia 200 ETF | A200 | ETF | 0.04 | 24.67% | 11.24% | 9.79% |
| iShares S&P 500 ETF | IVV | ETF | 0.04 | 36.06% | 13.73% | 16.22% |
| iShares Core S&P/ASX 200 ETF | IOZ | ETF | 0.05 | 24.63% | 11.14% | 9.50% |
| SPDR S&P/ASX 200 | STW | ETF | 0.05 | 24.64% | 11.06% | 9.66% |
| SPDR S&P/ASX 200 ESG Fund | E200 | ETF | 0.05 | 24.12% | 12.31% | n/a |
| Vanguard Australian Shares Index ETF | VAS | ETF | 0.07 | 24.42% | 10.36% | 9.49% |
| iShares S&P Midcap ETF | IJH | ETF | 0.07 | 36.96% | 11.43% | 13.10% |
| iShares S&P Small-Cap ETF | IJR | ETF | 0.07 | 36.51% | 8.66% | 11.43% |
| Vanguard All-World ex US Shares Index ETF | VEU | ETF | 0.07 | 15.23% | 5.84% | 6.55% |
| SPDR S&P World ex Australia Carbon Control Fund | WXOZ | ETF | 0.07 | 29.77% | 10.59% | 12.71% |
| iShares Core Cash ETF | BILL | ETF | 0.07 | 4.54% | 3.13% | 1.95% |
| Betashares Global Shares ETF | BGBL | ETF | 0.08 | 30.09% | 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 | 28.18% | 9.37% | n/a |
| iShares Core MSCI World ex Australia ESG ETF | IWLD | ETF | 0.09 | 30.44% | 11.49% | 14.23% |
| SPDR S&P 500 ETF Trust | SPY | ETF | 0.09 | 35.79% | 13.78% | 16.38% |
| iShares S&P 500 AUD Hedged ETF | IHVV | ETF | 0.10 | 31.64% | 7.85% | 12.56% |
| SPDR World ex Australia Carbon Control (Hedged) Fund | WXHG | ETF | 0.10 | 26.85% | 7.31% | 10.91% |
| Source: ASX | Period ending: 29 November 2024 | ||||||
How do the cheapest ETFs compare to the market?
According to the latest data, the cheapest ETFs in Australia are now the Vanguard US Total Market Shares Index (VTS) ETF and Macquarie Core Australian Equity Active ETF (MQAE), both with an MER of 0.03%.
The Vanguard VTS ETF has returned 29.15% over the 12 months to 18 November 2024, while the Macquarie Core MQAE ETF has returned 10.89% since it began trading in May 2024.
This means the Vanguard VTS ETF has outperformed the S&P 500, which grew 23.78% in the 12 months to 18 November 2024 and also beat the Nasdaq-100, which grew 23.27% in the same period.
A few averages worth noting (to 30 November 2024):
- Average ETF return over 1 year: 19.51% p.a.
- Average ETF return over 3 years: 4.80% p.a.
- Average ETF return over 5 years: 6.10% p.a.
- Average ETF management fee (MER): 0.53% p.a.
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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
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 | 134.25% |
| Munro Climate Change Leaders Fund (Managed Fund) | MCCL | ETF | 0.9 | 78.64% |
| Betashares Geared US Equity Fund Currency Hedged (Hedge Fund) | GGUS | ETF | 0.8 | 69.13% |
| Betashares S&P/ASX Australian Technology ETF | ATEC | ETF | 0.48 | 60.18% |
| Montaka Global Extension Fund (Quoted Managed Hedge Fund) | MKAX | ETF | 1.25 | 57.84% |
| VanEck Video Gaming and Esports ETF | ESPO | ETF | 0.55 | 55.87% |
| Global X Ultra Long Nasdaq 100 Complex ETF | LNAS | ETF | 1 | 54.73% |
| Betashares Future of Payments ETF | IPAY | ETF | 0.67 | 53.05% |
| VanEck Australian Banks ETF | MVB | ETF | 0.28 | 51.43% |
| Betashares Geared Australian Equity Fund (Hedge Fund) | GEAR | ETF | 0.8 | 50.61% |
| Global X FANG+ ETF | FANG | ETF | 0.35 | 50.59% |
| Montaka Global Equities Fund (Managed Fund) | MOGL | ETF | 1.32 | 50.15% |
| SPDR S&P/ASX 200 Financials ex A-REIT Fund | OZF | ETF | 0.34 | 49.98% |
| Betashares Financials Sector ETF | QFN | ETF | 0.34 | 48.80% |
| WCM Quality Global Growth Fund (Quoted Managed Fund) | WCMQ | ETF | 1.25 | 48.38% |
| Munro Concentrated Global Growth Fund (Managed Fund) | MCGG | ETF | 0.7 | 46.27% |
| Betashares Video Games and Esports ETF | GAME | ETF | 0.57 | 45.81% |
| Betashares Online Retail and E-Commerce ETF | IBUY | ETF | 0.67 | 43.92% |
| Hyperion Global Growth Companies Fund (Managed Fund) | HYGG | ETF | 0.7 | 43.92% |
| Betashares Global Banks ETF - Currency Hedged | BNKS | ETF | 0.57 | 43.07% |
| Source: ASX | Period ending: 29 November 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.
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.
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