Question 1

How much do ETF fees cost over time?

Accepted Answer

A seemingly small fee difference compounds dramatically. On a $50,000 investment growing at 8% over 30 years with $500/month additions: a 0.07% MER (like VAS) costs about $15,000 in fees. A 1.8% MER active fund costs about $330,000. That's $315,000 difference from just 1.73% in fees.

Question 2

What is a good MER for an ETF?

Accepted Answer

Australian index ETFs like VAS, A200, and IOZ have MERs of 0.04-0.10%. Diversified ETFs like VDHG are around 0.27%. Anything under 0.30% is considered low-cost. Active managed funds typically charge 0.80-1.80%, which is hard to justify when most underperform the index.

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