Want to invest ethically for a brighter future?
(but still make lots of money)?

Want to invest ethically for a brighter future? (but still make lots of money)?

 Take Rask’s FREE Ethical Investing course today.

  • Online & 100% free
  • ETFs, shares & Super
Want to invest ethically for a brighter future? 
(but still make lots of money)?

 Take Rask’s FREE online Ethical Investing course.

Will Australia Get 0% Fee ETFs In 2019?

Last year Fidelity Investments, one of the world’s largest asset managers, controversially launched two exchange-traded funds (ETFs) in the US that had zero fees.

That’s right. Not 1% fees. Not 0.1%. Not 0.01%. 0%. Nudda. Zilch.

Vanguard and Blackrock are already known for offering very low-cost index funds globally and in Australia.

The two cheapest that I’m aware of in Australia are the iShares S&P 500 ETF (ASX: IVV) and Vanguard US Total Market Shares ETF (ASX: VTS), both of which have annual fees of around 0.05%.

Fidelity’s move was a very interesting one. How do you make money on 0% fees?

The answer is you don’t. But I guess Fidelity hopes to make money from its customers in other ways, perhaps with its other funds, shorting or services. As a comparison, some credit cards come with benefits, but it’s the people that don’t pay on time and incur interest that pay for those benefits. In other words, the ETFs could be ‘loss leaders’ for Fidelity.

It seems unlikely that Vanguard and Blackrock will follow suit and drop prices to 0%. Vanguard offers its products to investors virtually at cost, and Blackrock needs to make a profit for its shareholders. BetaShares recently launched the Australia A200 ETF (ASX: A200) with a fee of just 0.07%, making it the cheapest Australian shares ETF on our list.

However, we may see further fee reductions in time, similar to how Coles Group Limited (ASX: COL) and Woolworths Group Ltd (ASX: WOW) reduced prices to combat Aldi and Costco in Australia.

With almost US$3 billion invested so far, the first zero-fee Fidelity ETFs are going quite well since launching around six months ago, although there’s a long way to go before they are the size of some of the major ETFs.

Zero Fees. Who Cares?

Does the difference between 0.04% and 0% make it worthwhile switching from one ETF to another?

Well, there could a lot of taxation implications (and potentially other issues) involved in moving money across. That aside, a $1 million portfolio would pay management fees of around $400 a year on 0.04%. That’s not much when you’re looking at $1 million, but the savings would compound over time.

With ETFs now being so cheap (or free), it’s very easy to achieve the average market return. I think considering these ultra-low-cost ETFs would be a wise idea.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here or enter your email address below to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just enter your email address below and we'll send you the report right away.

From 200+ ETFs in Australia, our top investment analyst has just identified his #1 ETF for 2021 and beyond.

Low fees? Check.

Long-term growth potential? Check.

Regular cash returns? Check!

This ETF makes investing in ETFs "Super-Easy".

Simply click here to access the full ETF report, ticker code, and step-by-step investment guide. Our expert's #1 ETF report is completely free.

No gimmicks, no payment, no credit card info. Just click the link below and enter your email address. We'll send you the report right away.

CLICK HERE TO GET THE REPORT

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Keep reading:

General Financial Advice warning
The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms & Conditions and Financial Services Guide before using this website.

© Rask Australia 2020

Join 20,000+ smart investors

Join the Rask Australia mailing and we’ll send you free investment reports, podcasts, expert insights, investing courses, ASX news and lots, lots more. All free. 

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian-owned.

feedback-icon

What can we do better? Please give us us some feedback :)

We care about your experience, please let us know if you have any suggestions to improve our site.