ETF fee for holdings above 50k

[flightcrank]

There seems to be an additional fee to most ETFs not reflected in the management fee. Which is in addition to the per year management fee of the whole balance. For example i think for VAS there is a $150 fee for holdings for every 50k you hold. in addition to the 0.10% fee per year on the balance. For A200 it seems to be $35 for every 50k you hold.

Why do the ETF's punish you for having more money invested with them. Or is the fee for every 50k not that much in the grand scheme of things.

I see people referring to the yearly management fee. and never hear anything about the 50k fee. any thoughts ?

 

[Sharkman]

never heard of such a fee... i don't hold VAS, but i do have a decent sized VEU holding (ie. in the hundreds of thousands range), so if there was such a fee i would've noticed it

where are you seeing this fee? did you buy the units thru a stockbroker on the secondary market, or did you buy the units directly from the fund managers themselves? if the latter, there could well be such a fee - i don't know for sure as i use the former method. you don't pay brokerage for transactions under the latter, so this could be some custodian type fee the fund manager charges for maintaining your holding

 

[flightcrank]

it seems to be for ETF's trading in aussie stocks

 

[Sharkman]

that looks like just their worked example of the normal MER, rather than a separate fee? 0.3% of 50,000 is $150.

also that's not VAS, that's a flavoured/subsector ETF (ie. small companies index). VAS is benchmarked to the S&P ASX 300 and has a significantly lower MER than that.

 

[flightcrank]

also that's not VAS, that's a flavoured/subsector ETF (ie. small companies index). VAS is benchmarked to the S&P ASX 300 and has a significantly lower MER than that.

oh i thought it was because it has the fee and then the word And in bold.

yes it says "example of annual fees" but this is the product disclosure statement they use for VAS

 

[aus_trader]

oh i thought it was because it has the fee and then the word And in bold.

yes it says "example of annual fees" but this is the product disclosure statement they use for VAS

I think Sharkman is correct about the Vanguard fees. Some other funds have a variety of other fees attached that you need to be aware of as the below example shows:

 

[Sharkman]

TBH i don't recall reading that section, though it has been a few years since i originally decided to invest in VEU, maybe the PDS has changed since then, or maybe i just don't remember it because one tends to forget things that don't have anything outlandish about them.

but on reading the above, to me that "And" is a continuation of the sentence above it, not the sentence to the left. i agree the way they have laid it out could be a bit confusing though.

if you make sure that you are buying the units on the secondary market thru a regular stockbroker, not buying them directly from the fund manager themselves, if it's a reputable fund manager (which Vanguard certainly is), fairly certain you will only get charged the stated MER and nothing else.

 

[HelloU]

1. (serious comment) these places are pretty good when you ring them, and they will direct you to where you can find historical data (so MER?) and similar.

2. (flippant comment) these things are generally trusts and so annual tax statement is large (multi page). Working through the detail of the figures to see if costs were 1.0%, instead of 0.95%, is the last thing on my mind.

 

[Bill M]

it seems to be for ETF's trading in aussie stocks

flightcrank, I am pretty sure you are wrong about VAS. The fee in the following table clearly shows the fees for VAS is .14% P/A. So a 50K portfolio would cost you only $70 a year in management fees. The screenshot you have up is showing the management fees for the Australian Small Companies Index ETF which have fees of .30%. It is a different ETF with different fees, cheers.

 

[aus_trader]

flightcrank, I am pretty sure you are wrong about VAS. The fee in the following table clearly shows the fees for VAS is .14% P/A. So a 50K portfolio would cost you only $70 a year in management fees. The screenshot you have up is showing the management fees for the Australian Small Companies Index ETF which have fees of .30%. It is a different ETF with different fees, cheers.
View attachment 102537

Bill, I thought the management fee for VAS was only 0.1%, see below in PDS:

 

[Sharkman]

yep it's 0.1% now, but it used to be 0.14% for a long time, up until maybe a few months ago - think they were kind of forced to react to the new kid on the block (A200)

 

[aus_trader]

yep it's 0.1% now, but it used to be 0.14% for a long time, up until maybe a few months ago - think they were kind of forced to react to the new kid on the block (A200)

Fantastic
Good news for you too Sharkman, VEU fees have dropped from 0.09% to 0.08%

 

[Bill M]

Bill, I thought the management fee for VAS was only 0.1%, see below in PDS:

Yes you are right, I remember now. Funny thing is I pulled that off one of their current links, they couldn't have updated it yet. So that 50K attracts a fee of only $50 P/A.

 

[Sharkman]

Fantastic
Good news for you too Sharkman, VEU fees have dropped from 0.09% to 0.08%

absolutely, a pleasant surprise indeed. low cost index investing has never been better than it is now. convenience, and a smorgasbord of fund managers generating the competition that produces lower fees. it's never been easier, especially for someone starting out on their investment journey, to get going. sadly i know a few people who still disparage anything to do with stocks ("but what if it goes to zero? that could happen, right?"), despite me explaining to them how index ETFs work, they'd rather put everything in the bank and earn practically zero interest.

 

[aus_trader]

absolutely, a pleasant surprise indeed. low cost index investing has never been better than it is now. convenience, and a smorgasbord of fund managers generating the competition that produces lower fees. it's never been easier, especially for someone starting out on their investment journey, to get going. sadly i know a few people who still disparage anything to do with stocks ("but what if it goes to zero? that could happen, right?"), despite me explaining to them how index ETFs work, they'd rather put everything in the bank and earn practically zero interest.

Just a quick question about VEU since you own it. I don't own any but started reading up and found it doesn't offer Dividend/Distribution re-investing or DRP. Is my understanding correct ? So do you get a cheque or bank deposit for the distributions each quarter ?

 

[Sharkman]

Just a quick question about VEU since you own it. I don't own any but started reading up and found it doesn't offer Dividend/Distribution re-investing or DRP. Is my understanding correct ? So do you get a cheque or bank deposit for the distributions each quarter ?

not sure about DRP as i generally don't do that - too many parcels to keep track of. if there's a decent discount on offer i'd consider it, but i don't think that's the case here.

the distributions are similar to any other div, they can go directly to your account if you set it up that way (which i have - i can't see any reason why i'd want to go the cheque route). you get told what the distribution is in USD terms once it's declared, but you don't find out what that's going to be in AUD until the FX conversion date.

15% of it will get deducted as US withholding tax prior to the div landing in your account if you've filled in the W-8 BEN form (substantially more than 15% if you haven't), as VEU is US domiciled. you'll naturally want to declare that at tax time to get the offset.

 

[aus_trader]

not sure about DRP as i generally don't do that - too many parcels to keep track of. if there's a decent discount on offer i'd consider it, but i don't think that's the case here.

the distributions are similar to any other div, they can go directly to your account if you set it up that way (which i have - i can't see any reason why i'd want to go the cheque route). you get told what the distribution is in USD terms once it's declared, but you don't find out what that's going to be in AUD until the FX conversion date.

15% of it will get deducted as US withholding tax prior to the div landing in your account if you've filled in the W-8 BEN form (substantially more than 15% if you haven't), as VEU is US domiciled. you'll naturally want to declare that at tax time to get the offset.

Thanks for the info Sharkman. Cheers.

Double checked and there is no DRP in place and therefore also no discounts on offer: