What the Fees and costs Warning means
When we believe an ETF or fund has a higher-than-average yearly management fee (and/or performance fee), Best ETFs Australia will apply a 'high fee' warning.
As you can imagine, high fees reduce an investor's return on their investment. That's why most (good) Product Disclosure Statements (PDS) carry this warning:
"Small differences in both investment performance and fees and costs can have a substantial impact on your long-term returns. For example, total annual fees and costs of 2% of your investment balance rather than 1% could reduce your final return by up to 20% over a 30 year period (for example, reduce it from $100,000 to $80,000)."
Please note: we may also apply our fee warning to an ETF or fund for any (or all) of the following reasons:
- The buy-sell spread is high -- in our opinion or simply relative to the peer group and alternatives
- We believe the performance fee is not reasonable or applied correctly
- The indirect costs or allowances made in the fund's PDS are not reasonable
- The market-making function is inappropriate (in our opinion)
If you have any questions call the fund/ETF provider, or speak to your financial adviser. If you believe we have made a mistake in applying this label please let us know by getting in contact with the Best ETFs team today.