Expense Ratios in Australia: Why Low Fees Matter for Your Returns

A fund with a 0.07% expense ratio (like VAS) charges $7 per year on a $10,000 investment. A fund with a 1.2% ratio charges $120 on the same amount. That $113 annual difference might seem small, but compounded over 30 years on a growing portfolio, it costs tens of thousands in lost wealth.

The maths in Australian terms: two investors start with $50,000, earning identical 7% gross returns for 30 years. Investor A uses A200 at 0.04% and ends with approximately $378,000. Investor B uses an actively managed Australian share fund at 1.1% and ends with roughly $299,000. The fee difference alone costs nearly $79,000.

Australian super funds vary enormously in fees. Industry funds like AustralianSuper and Hostplus charge 0.5-0.7% total (including investment and admin fees). Retail funds attached to banks and financial advisers often charge 1.0-1.5%+. The Productivity Commission found that Australians lose billions collectively to excessive super fees each year. Checking and comparing your super fees is one of the highest-impact financial actions you can take.

For ASX ETFs, below 0.20% is excellent for a broad market fund. Between 0.20-0.50% is reasonable for specialised or thematic funds. Above 0.75% warrants careful scrutiny — the fund needs meaningfully better returns to justify the cost, and most do not deliver them.

Over a lifetime of investing through super and personal portfolios, the expense ratio is one of the few variables entirely within your control — and one of the most impactful for long-term wealth.