Investment Fee Impact Calculator — ETF vs Managed Fund

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Why the Fee Gap Matters

When an adviser recommends an ETF or a managed fund, the headline return looks similar but the net return to you differs by fees. Index ETFs pass through market returns minus a small management cost, often under 0.20%. Active managed funds add research, trading and distribution costs, often above 1%. SPIVA Australia consistently finds most active Australian equity funds underperform benchmarks after fees over five years — costs are certain, outperformance is not.

Your SOA must compare the recommended product against alternatives including lower-cost options and explain why a higher-fee fund is in your best interests under s961B. If the document only shows percentages, convert to dollars with this tool. For background, see our ETFs vs managed funds guide and fee benchmarks.

What to Enter

Use figures from your SOA, PDS or platform statement: current invested balance, expected annual additions, gross return before fees (e.g. 7%), the ETF total cost and the managed fund total cost (management + performance + admin), and your horizon. Brokerage on occasional ETF trades is minor over long horizons and excluded for clarity — note it if you trade frequently.

What SPIVA Australia Shows After Fees

S&P Dow Jones SPIVA scorecards repeatedly find 70–80% of Australian active equity funds lag the S&P/ASX 200 over rolling five years after fees. Survivorship bias flatters the industry — closed poor performers vanish from averages. A 1.2% fee needs 1.2% annual outperformance just to break even with an index ETF, every year, before tax differences. Some managers achieve it in small caps or emerging markets where information gaps persist, but broad Australian large caps are heavily researched and hard to beat consistently.

Ask your adviser for the specific fund's after-fee, after-tax excess return versus its benchmark over five and ten years, not cherry-picked calendar years. If the SOA cites gross returns or three-year windows only, treat it as incomplete disclosure and request the full comparison required under best-interests reasoning.

Brokerage, Spreads and Tax Drag Beyond the MER

Management fees dominate long horizons, but check frictional costs: ETF brokerage ($5–$20 per trade) matters if you contribute monthly in small parcels — consider quarterly parcels orChess-sponsored auto-invest. Buy-sell spreads (0.05–0.30%) apply on entry/exit for both ETFs and unlisted funds. Turnover differs: index ETFs distribute capital gains rarely, while high-turnover active funds can distribute taxable gains annually, reducing after-tax compounding in personal names. In super accumulation (15%) versus pension (0%) the tax drag differs again — your SOA should state the after-tax assumption used.

How to Use the Result in Your SOA Review

Take the dollar gap to your adviser: what service justifies paying it? Under FOFA and RG 175.123 the SOA must disclose all fees in dollars and show why the higher-cost option was chosen over the cheaper alternative. If the reasoning is past performance alone, ask for risk-adjusted, after-fee comparisons over five-plus years and for the alternatives analysis required by s961B safe-harbour steps.

Also check ongoing advice fees layered on top — a 1% advice fee plus a 1.2% fund fee totals 2.2% drag. Our SOA fee calculator models that combined effect.

Frequently Asked Questions

Are ETFs always cheaper?
Almost always on management fees, but check spreads, brokerage if you trade often, and any advice/platform fees layered on top. The calculator isolates management-fee drag.

Does higher fee mean higher return?
No guarantee. After-fee returns are what matter. Ask for after-fee, risk-adjusted comparisons.

Is this personal advice?
No. Educational estimate only. Inputs stay in your browser. Consider licensed advice for your circumstances.

Where do I find my fund fees?
In the SOA fees section, PDS fee table, and annual statement. Look for MER/ICR plus performance fees.