An ETF vs managed fund decision is not settled by the management fee alone. For an Australian investor making regular purchases, transaction charges and platform fees can change which route costs less. Compare annual dollar costs before treating a small percentage difference as decisive.
Here, “managed fund” means an unlisted managed fund. An ETF is also a managed fund, but its units trade on an exchange. The calculator compares those two structures using your own inputs, in AUD. It does not choose investments or forecast returns.
ETF and unlisted fund annual cost comparison
Compare annual costs for two routes. Use the same average balance and contributions. Enter all fields, including zeros. AUD only.
Cost only. Total = balance × management % + platform + purchases × fixed fee + contributions × acquisition %. Rates divided by 100. Excludes sales, tax and tiered fees.
This tool runs in your browser. Your entries are not sent or saved. All amounts are in Australian dollars (AUD).
Load example fills hypothetical figures. They are not current rates or recommendations.
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What are you actually comparing?
Moneysmart describes managed funds as pooled investments and ETFs as funds traded on a stock exchange. Both can use active or passive strategies. “Index” describes an investment approach, not whether the fund is listed. Comparing an ETF with an actively managed fund mixes two decisions: structure and strategy.
Start with funds serving a similar purpose, holding comparable assets and carrying risks you understand. A share fund and a bond fund are not interchangeable because one has a lower fee. This comparison isolates selected costs; differences in asset allocation, liquidity and investment process still matter.
Vanguard explains that ETF transactions occur on the exchange, while unlisted fund transactions generally use a daily unit price. The convenience of an automated contribution or the control of placing an exchange order may matter to you, but neither settles the cost calculation.
Which costs belong in the annual total?
Use four buckets: annual management costs, annual platform costs, fixed purchase charges and proportional acquisition costs. Read the product disclosure statement (PDS) and the platform or broker’s fee schedule. A headline management rate may leave out charges paid separately.
Management costs are estimated as average holding balance multiplied by the annual percentage rate. They may be reflected in the fund’s value rather than appearing as a separate cash debit. Platform costs are your estimated annual AUD charge, not a universal fee for either structure.
Fixed purchase charges are multiplied by the number of transactions. Brokerage can be zero on some arrangements, so do not insert a fee merely because the investment is an ETF. For proportional acquisition costs, enter an effective rate against gross contributions. This can approximate an applicable entry cost; it is not a claim that every product uses the same spread formula.
What does a hypothetical AUD comparison show?
Suppose both routes have an estimated AUD20,000 average holding balance and AUD6,000 in annual contributions. One fund is bought each time. These numbers are hypothetical, not current provider quotes.
| Input | ETF route | Unlisted route |
|---|---|---|
| Purchases per year | 26 | 26 |
| Fixed cost per purchase | 6 | 0 |
| Acquisition rate on contributions | 0% | 0.10% |
| Annual management rate | 0.10% | 0.20% |
| Annual platform charge | 0 | 60 |
The ETF estimate is AUD20,000 × 0.10% + 26 × AUD6 = AUD176. The unlisted estimate is AUD20,000 × 0.20% + AUD60 + AUD6,000 × 0.10% = AUD106. Its fixed purchase charges are zero. The ETF’s management rate is lower, yet its selected annual costs are AUD70 higher.
Change only the ETF purchase count to 12, keeping annual contributions and average balance unchanged. Its estimate becomes AUD20 + 12 × AUD6 = AUD92, or AUD14 less than the unlisted route. That demonstrates sensitivity to transaction count, not a recommendation to postpone investing. Different timing can change market exposure and the actual average balance.
How should you enter your own numbers?
Use an annual average balance estimate, not automatically today’s account value. Growing contributions, withdrawals and market movements can make those amounts differ. The tool applies the same average balance to both routes to isolate costs; it does not simulate those movements.
Enter the same annual contribution total for both. Count purchases, not paydays: one fortnightly purchase is usually 26 transactions in a year; one monthly purchase is 12. Buying several funds on each occasion can mean more transactions. Use your actual planned count rather than assuming each deposit is one trade.
Fill every field, including explicit zeros where a charge does not apply. For a percentage-based platform fee, estimate the annual dollar cost separately using its terms. If you cannot estimate a charge reliably, the comparison is not ready. Avoid adding a cost twice when a quoted figure already includes it. Do not add an expense already included in the disclosed management figure.
The formula adds all four unrounded components and displays results to two decimal places. “ETF minus unlisted” is positive when the ETF costs more and negative when it costs less. It measures selected costs, not the net return you will receive.
When does the cost advantage reverse?
Return to the original hypothetical inputs and change only ETF brokerage to zero. The ETF total becomes AUD20 versus AUD106, a difference of AUD86. This is why a charged-brokerage example should not become a blanket rule about ETFs.
Alternatively, retain the original charges but raise both average balances to AUD100,000. Management costs become AUD100 and AUD200. Total estimates are AUD256 for the ETF and AUD266 for the unlisted fund, making the ETF AUD10 cheaper. Fixed charges and percentage charges respond differently as balances change.
Rerun the tool when a fee schedule, contribution plan or expected average balance changes. A result close to zero deserves particular caution because an omitted charge or a rough balance estimate can reverse it.
When does this comparison not fit?
This simplified model does not handle fee caps, tiers, minimum charges, performance fees, sales, exit charges, taxes or switching costs. The proportional acquisition estimate is an approximation, so check the product’s actual pricing method. It cannot establish which fund is suitable or whether a higher fee buys useful services.
It is also not a guide to moving existing investments. Selling can create costs and tax consequences outside this model. For a separate ETF switching-cost discussion, see VGS vs BGBL; do not read today’s annual-cost output as permission to switch.
Moneysmart notes that fund values can fall and some managed funds restrict withdrawals. Money needed at short notice should not be allocated solely because a calculator shows lower costs. For a separate discussion of portfolio composition, see DHHF vs VDHG. This article provides general education, not personalised financial or tax advice.
This guide was prepared with AI assistance and source checking; it has not received professional financial or legal review.
Quick decision checklist
- Compare similar investment objectives and underlying risks before comparing structures.
- Read each PDS and current fee schedule; separate management, platform and purchase charges.
- Use AUD inputs, an annual average balance and a realistic transaction count.
- Check zero-brokerage and changed-count scenarios without treating them as timing advice.
- Review excluded taxes, exit costs, fee tiers and withdrawal conditions before acting.
