Macquarie ups the ante on fees with new ASX ETFs

These new ETFs from Macquarie are going to turn some heads.

| More on:
Exchange-traded fund spelt out with ETF in red and a person pointing their finger at it.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The conventional wisdom on the ASX exchange-traded fund (ETF) landscape is that index funds offer investors the lowest fees. Amongst all ETFs on the Australian markets, the lowest charging are all index funds that cover either ASX or American indexes.

Of course, not all ASX ETFs are passive index funds. However, actively managed ETFs that offer exposure to concentrated, thematic portfolios or curated selections of shares tend to charge far higher annual management fees.

This logically makes sense. After all, all index funds have to do is mirror the benchmark index they happen to track – a process that is now almost entirely automated. Actively managed funds, however, need to employ analysts, portfolio managers and other expensive outlays.

Well, this week, that conventional wisdom is out the window. That's thanks to a new suite of ETFs from Macquarie Group Ltd (ASX: MQG).

Macquarie has just launched two new actively managed ETFs on the Australian share market. However, you wouldn't know it from the fees these new funds are charging.

Macquarie introduces new, low-fee ASX ETFs

First up is the Macquarie Core Australian Equity Active ETF (ASX: MQAE). This new fund draws "around" 200 investments from the S&P/ASX 300 Index (ASX: XKO). These stocks are chosen after all eligible investments are "continually assessed for the most robust and least correlated sources of return".

Macquarie uses a mix of data, risk and fundamental analysis to actively "fine-tune" its portfolio of stocks to deliver a return above an ASX index fund ideally.

Here's how the company described this approach:

The Macquarie Systematic Investments machine is constantly scanning the market with one eye on the future, with inputs continuously being updated and the signals utilised fine-tuned to seek potential trades.

Macquarie's dedicated in-house quantitative team are continually analysing the market in search of new ways to identify attractive stock characteristics, which are distilled into specific signals. Currently, the signal set is over 60 signals, and all are applied to the 300 ASX stocks and around 1,400 global equities for these active ETFs.

The centrepiece of these investments is the ultra-low management fee of 0.03% per annum. That's well below other actively managed ASX ETFs. For example, the BetaShares Australian Quality ETF (ASX: QLTY) charges a management fee of 0.35% per annum.

It's even below what most passive ASX index funds charge. The most popular index fund on the ASX is the Vanguard Australian Shares Index ETF (ASX: VAS). It asks investors to pay a fee of 0.07% per annum.

It's a similar story with Macquarie's other new ETF – the Macquarie Core Global Equity Active ETF (ASX: MQEG). This fund works similarly to MQAE but draws 400-500 stocks from the global arena, specifically from the MSCI World ex-Australia ex-Tobacco Index.

This ETF charges an annual management fee of 0.08%. This fee is lower than that of a comparable fund, the Vanguard MSCI Index International Shares ETF (ASX: VGS), which asks 0.18% per annum.

A caveat, though: Both of these actively managed ASX ETFs also charge performance fees. If either ETF outperforms its benchmark index in any given period, investors will pay a 20% performance fee on any returns above the index's return, subject to a high watermark.

With all of this in mind, it will be interesting to see what kinds of returns these new ETFs generate going forward.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor Sebastian Bowen has positions in Vanguard Australian Shares Index ETF. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on ETFs

Man holding out Australian dollar notes, symbolising dividends.
ETFs

5 excellent ASX ETFs to buy with $5,000 in April

Here are five funds to consider buying with your hard-earned money this month.

Read more »

ETF in blue with person's hand in the direction of green and red bars on graph.
ETFs

Is it time to buy Vanguard US Total Market Shares Index ETF (VTS) following the sell-off?

Should investors try to buy this ASX ETF?

Read more »

ETF on different coloured wooden blocks.
ETFs

Why this ASX ETF could be the top choice to take advantage of tariff stock market pain

This fund is getting hit hard. It could be a great buy today.

Read more »

Cybersecurity professional man inspects server room and works on iPad.
ETFs

Following last week's superannuation cybersecurity attack, is it time to consider HACK ETF?

The companies in this fund could be big winners from rising cyber attacks.

Read more »

ETF written with a blue digital background.
ETFs

Battle of the ASX ETFs: Why has VGS outperformed VTS this year?

What’s causing a significant difference in performance between these ETF heavyweights?

Read more »

Two people work with a digital map of the world, planning their logistics on a global scale.
ETFs

Own the world with these 3 global ASX ETFs

These funds could be top picks for investors that are overly concentrated on Australian shares.

Read more »

Three boys dressed as knights wield swords as they defend their castle wall.
ETFs

The VanEck Wide Moat ETF is down more than 15% from its peak. Is it time to load up?

This popular ETF doesn't go on sale too often.

Read more »

Two business workers at a desk comparing companies to analyse the best option for share price returns
Share Market News

ETF Investing: Should I buy VTS or A200?

Which fund could be the right fit for you?

Read more »