Choosing low-cost ETFs in Australia

By Chandrasekar Dhakshinamurthy · Last reviewed 4 October 2026

An exchange-traded fund (ETF) holds a basket of investments — often every company in an index such as the ASX 200 — and trades on the ASX like a share. For many Australians it is the simplest way to own a broad slice of the market.

There are now hundreds of ETFs on the ASX, and several often track the same index. This guide covers how to compare them on the things that genuinely differ.

Why fees matter more than they look

You cannot control what the market does. You can control what you pay for access to it.

An ETF's management fee (also called the expense ratio or management cost) is charged every year as a percentage of your investment, whatever the fund returns. It comes out of the fund quietly, so you never see a bill — it simply reduces your return.

The gap between two fees looks tiny, but it compounds. On a $50,000 investment, a fund charging 0.04% a year costs about $20 a year; one charging 0.50% costs about $250. Over twenty years, with the balance growing, that difference typically runs to many thousands of dollars — for owning essentially the same investments.

Funds tracking the same market can be near-identical

Several of Australia's most popular ETFs cover the same broad Australian share market. At the time of writing, ShareSift showed these three-year returns:

They hold largely the same companies, so their returns sit within a fraction of a percent of each other. They differ slightly in which index they follow (the ASX 200, ASX 300, or a provider's own top-200 index), which explains the small differences. When funds are this alike, cost becomes one of the few things that clearly separates them.

A note on where ShareSift's fee figures come from

Our data provider does not report management fees for most ASX-listed ETFs. Where an issuer publishes its fee on its own product page, ShareSift collects it and labels it with the date it was gathered — A200, for example, shows 0.04% (issuer-published). For funds where we have no reliable figure, the fee shows as "—" rather than a guess.

So for VAS, IOZ and STW, check the current fee on the issuer's website or in the fund's Product Disclosure Statement (PDS). Fees change, and the PDS is the authoritative source.

What to compare, in order

1. What the fund holds

Fees only matter between funds that do the same job. Before comparing costs, be clear what you want to own: the Australian market, global shares, US technology, bonds. Two cheap ETFs holding different things are not alternatives.

Each ETF page on ShareSift shows the fund's top holdings and sector weights. For example, an ASX 200 fund is heavily weighted to banks and miners, because those are the largest companies in Australia. A global fund such as VGS (fee 0.18% at the time of writing) spreads across thousands of overseas companies.

2. The fee

Once the funds hold comparable things, compare the management fee. Lower is better, all else equal. ShareSift's low-cost ETF screen lists US-listed funds charging 0.15% a year or less with at least $1 billion in assets.

Be wary of comparing a broad index fund with a specialised one on fee alone: a thematic or actively managed ETF will almost always cost more, and the question is whether what it does differently is worth the extra.

3. Size

A fund's assets under management matter for two reasons. Larger funds are less likely to close, which would force you to sell, possibly at a bad time for tax. And popular funds usually trade with tighter bid-ask spreads — the small gap between buying and selling prices that is another, less visible cost. All four ASX funds above manage several billion dollars.

4. Tracking

A good index fund delivers the index's return minus its fee, and little else. If a fund regularly lags its index by more than its fee, something else is costing you. Compare a fund's returns with its index over several years; ShareSift shows the fund's 1-, 3- and 5-year returns against its category average.

5. Other costs you cannot see in the fee

• Brokerage — what your broker charges per trade. With small regular investments, brokerage can cost more than the fund's annual fee.
• The bid-ask spread, above.
• Currency — global funds may or may not be currency-hedged, which changes how exchange rates affect your return.

A simple checklist

1. Decide what you want to own.
2. List the ETFs that hold it.
3. Compare their fees — on the issuer's site or PDS where ShareSift shows "—".
4. Prefer funds with substantial assets and an established history.
5. Check they track their index closely after fees.
6. Factor in brokerage for how often you will buy.

What this guide does not cover

ETFs suit different people differently depending on tax, timeframe and the rest of what they own. This guide explains how to compare funds; it does not say which fund, or whether ETFs at all, suit you.

This information is general in nature and does not take into account your objectives, financial situation or needs. ShareSift is not a financial adviser and does not hold an Australian Financial Services Licence. Funds named are examples, not recommendations. Read the Product Disclosure Statement and consider seeking independent advice before making an investment decision.