Investment fees are one of the few aspects of investing you can directly control. While you cannot control market returns, you can choose low-cost investments — and the long-term impact of doing so is significant.
Types of Investment Fees in Australia
Management Expense Ratio (MER)
The MER is the annual fee charged by an ETF or managed fund to cover operating costs. It is expressed as a percentage of your investment and deducted automatically from fund returns — you don’t pay it separately; it reduces the fund’s return before you see it.
Common Australian ETF MERs:
| ETF | MER |
|---|---|
| A200 (Betashares ASX 200) | 0.04% |
| VAS (Vanguard ASX 300) | 0.07% |
| IWLD (iShares MSCI World) | 0.09% |
| VGS (Vanguard MSCI World ex-Aus) | 0.18% |
| VAF (Vanguard Australian Fixed Interest) | 0.20% |
| VDHG (Vanguard Diversified High Growth) | 0.27% |
| Typical active managed fund | 0.80–1.50% |
| Typical super fund (retail/industry) | 0.50–1.20% |
Brokerage fees
Charged per transaction when you buy or sell ETFs or shares.
| Platform | Fee per trade |
|---|---|
| SelfWealth | $9.50 flat |
| Pearler | $6.50 flat |
| CommSec | $19.95 (<$10K) / $29.95 ($10K–$25K) |
| Superhero | $0 (ETFs) / $5 (shares) |
| Stake | $3 (USD trades) |
For small regular investors, brokerage costs are relatively more significant. On a $500 monthly investment, a $9.50 brokerage fee represents 1.9% per trade. Platforms like Pearler (cheaper brokerage) or micro-investing apps (no per-trade fee) can be more cost-effective for small regular amounts.
Financial adviser fees
Licensed financial advisers in Australia charge:
- Statement of Advice (SOA): $2,000–$5,000 (one-off)
- Ongoing advice fee: 0.5–1.5% of portfolio/year, or flat fee $2,000–$5,000/year
- SMSF setup: $2,000–$5,000+
Adviser fees are appropriate when complexity warrants it (estate planning, SMSF, tax structuring, retirement income modelling). For straightforward ETF portfolios, a one-off advice session is usually more cost-effective than ongoing percentage-based fees.
The Compounding Cost of Higher Fees
The most important thing to understand about investment fees is that they compound over time — exactly like returns do. A higher MER doesn’t just cost you that amount each year; it costs you the future growth on the money that was deducted.
Illustrative example: $100,000 invested for 30 years, 9% gross return
| Annual fee | Net annual return | Ending portfolio value |
|---|---|---|
| 0.07% (VAS) | 8.93% | ~$1,293,000 |
| 0.27% (VDHG) | 8.73% | ~$1,242,000 |
| 1.00% (active fund) | 8.00% | ~$1,006,000 |
| 1.50% (high-cost fund) | 7.50% | ~$878,000 |
The difference between a 0.07% MER and a 1.50% MER over 30 years: ~$415,000 on a $100,000 starting investment — a 47% difference in ending wealth. This is why MER matters.
Note: Illustrative only. Actual returns will vary. Past performance is not a reliable indicator of future performance.
Total Cost of Ownership
When comparing investment options, consider total cost:
ETF portfolio (SelfWealth, monthly $1,000):
- Annual MER (0.14% on $100K): $140
- Annual brokerage (12 × $9.50): $114
- Total: ~$254/year
Active managed fund ($100K, 1.2% MER):
- Annual MER: $1,200
- No separate brokerage
- Total: ~$1,200/year
Difference: ~$946/year — which at 9% compounding over 20 years represents significant foregone wealth.
Super Fund Fees
Super fund fees matter enormously over a 30–40 year working life. APRA publishes regular fee data:
- Industry super funds: typically 0.50–0.90%/year (including investment costs)
- Retail super funds: typically 0.80–1.50%/year
The government’s YourSuper comparison tool at moneysmart.gov.au provides fee comparison across funds. ASIC also warns that a 1% difference in fees over a 40-year career can reduce your super balance by approximately 20%.
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Frequently Asked Questions
What is a good MER for an ETF in Australia? Broad-market Australian ETFs are among the cheapest in the world. An MER below 0.10% is excellent (A200, VAS, IWLD). MERs above 0.50% should be scrutinised — ask what additional value justifies the higher cost relative to a comparable cheap index ETF.
Do ETF fees come out of my account automatically? No — MER fees are deducted from the fund’s assets before the unit price or returns are calculated. You never receive an invoice for MER; it simply reduces the fund’s total return by that amount each year. It’s invisible but real.
Are financial adviser fees worth paying? For complex situations — nearing retirement, large super balances, estate planning, SMSF, significant investment property portfolios — financial advice can be valuable. For straightforward ETF portfolios being built over 20–30 years, the cost of ongoing percentage-based advice fees may outweigh the benefit for many investors. General information only.
This article provides general financial information only. For advice tailored to your situation, speak with a licensed financial adviser through the ASIC financial advisers register or MoneySmart.