Management Fees in 2025: What Australian Investors Must Know

Management fees are a crucial, yet often misunderstood, aspect of investing in Australia. Whether you’re building wealth through superannuation, ETFs, managed funds, or even property trusts, these fees can make a significant difference to your long-term returns. With 2025 bringing new regulatory tweaks and increased transparency requirements for investment products, it’s time to get clear on what you’re paying—and why it matters.

What Are Management Fees?

At their core, management fees are charges levied by fund managers or investment platforms for overseeing your portfolio. They cover the cost of professional investment expertise, research, and administration. In Australia, these fees are typically expressed as an annual percentage of your assets under management (AUM), often ranging from 0.10% for low-cost index funds to 2% or more for actively managed products.

• Superannuation funds: Most MySuper and retail super funds charge a management fee, which can be found in the Product Disclosure Statement (PDS).

• Managed funds and ETFs: Fees are disclosed as the Management Expense Ratio (MER) or Indirect Cost Ratio (ICR).

• Separately Managed Accounts (SMAs): These can have tiered management fees depending on the size of your investment.

For example, if you invest $50,000 in a fund with a 1% management fee, you’ll pay $500 per year—regardless of whether the fund’s value rises or falls.

2025 Policy Updates and the Push for Transparency

This year, the Australian Securities and Investments Commission (ASIC) introduced new disclosure rules for investment products. Fund managers must now provide clearer, more standardised reporting of all fees, including management, administration, and performance-based charges. The goal is to ensure investors know exactly what they’re paying for and to help them compare products more easily.

• Product dashboards: Super funds and managed funds must update online dashboards with fee breakdowns and performance metrics in a consistent format.

• Real-time fee calculators: Many platforms now offer interactive tools that project the lifetime impact of management fees on your returns.

• Fee caps for default super: From July 2025, MySuper default options are subject to a 1.1% cap on combined administration and investment fees, making low-fee options more accessible.

This regulatory shift is empowering Australians to spot hidden costs and demand better value from their investments.

How Management Fees Affect Your Wealth

While a 1% annual fee may sound trivial, the compounding effect over decades is anything but. Consider this scenario:

• Two investors each start with $100,000 and achieve 7% annual returns before fees.

• Investor A pays a 0.3% fee; Investor B pays 1.2%.

• After 30 years, Investor A ends up with over $630,000, while Investor B has just under $530,000—a difference of $100,000, purely due to fees.

In 2025, with Australians living longer and relying more on personal savings, these differences are even more critical. Even small fee reductions can translate to years of extra retirement income.

Smart Strategies for Minimising Management Fees

Here are practical steps to keep more of your returns:

• Compare apples with apples: Use ASIC’s Moneysmart tools and fund dashboards to benchmark management fees across similar products.

• Consider passive options: Low-cost index funds and ETFs often charge lower management fees than actively managed funds—and many have matched or outperformed them over the past decade.

• Consolidate accounts: Merging multiple super or investment accounts can reduce duplicated fee drag.

• Negotiate on larger balances: Some platforms offer fee discounts for investors with substantial portfolios.

• Watch out for performance fees: Some funds charge extra if they beat a benchmark. Make sure you understand how these are calculated and if they’re justified by real outperformance.

It’s also wise to regularly review your investment mix as your balance grows, since even small shifts in fee structure can have a big impact over time.

The Bottom Line

Management fees are an unavoidable part of investing, but that doesn’t mean you have to accept excessive charges. 2025’s new rules make it easier than ever to scrutinise what you’re paying and demand better value. Take the time to check your current investments, use the new disclosure tools, and don’t be afraid to switch if you find a better deal elsewhere. Your future self will thank you.