With investment fees under increasing scrutiny, no transaction fee mutual funds are drawing attention from Australian investors seeking to maximise returns. These funds promise a way to invest without the upfront cost of brokerage or entry fees. But as the Australian investment landscape evolves—especially with recent 2025 regulatory tweaks—how do these ‘fee-free’ funds actually stack up?
What Are No Transaction Fee Mutual Funds?
No transaction fee (NTF) mutual funds allow investors to buy and sell units without paying the typical brokerage, entry, or exit fees. Instead, these funds recoup costs through other means, such as management fees or by working with distribution platforms that absorb the cost in exchange for higher fund exposure.
- Brokerage-free: No upfront trading charges when buying or selling fund units.
- Accessible: Often offered via online investment platforms or direct from fund providers.
- Appealing to regular investors: Particularly suited for dollar-cost averaging or regular investment plans.
In Australia, platforms like SelfWealth, Vanguard Personal Investor, and even the major banks now offer NTF options, reflecting a broader shift toward fee transparency and investor empowerment.
2025 Policy Updates and Industry Trends
The Australian Securities and Investments Commission (ASIC) has tightened disclosure rules in 2025, requiring greater clarity around all-in investment costs—including indirect costs often buried in Product Disclosure Statements. This means that while NTF funds continue to advertise ‘zero transaction fees’, they must now be upfront about management expense ratios (MERs), performance fees, and any platform administration charges.
Key 2025 trends include:
- Platform competition: New entrants like Betashares Direct are waiving transaction fees for in-house funds to attract retail investors.
- Lower overall fund costs: Index and passive funds are leading the NTF charge, with some MERs dropping below 0.15%.
- Regulatory scrutiny: ASIC is closely watching for ‘fee-shifting’—where brokers or platforms recoup lost transaction fees elsewhere, such as through wider buy/sell spreads or higher ongoing charges.
The result is a more competitive landscape, but also one where investors need to read the fine print more than ever.
Are No Transaction Fee Funds Really Cheaper?
The main appeal of NTF mutual funds is obvious: zero transaction costs. For Australians investing smaller amounts or making frequent contributions, this can mean significant savings over time. For example, a $1,000 monthly investment in a typical managed fund could rack up $60–$120 a year in transaction fees, which NTF funds eliminate.
However, there are some important caveats:
- Higher ongoing fees: Some NTF funds offset zero transaction costs by charging slightly higher management fees. Over a decade, even a 0.2% difference in MER can erode long-term returns.
- Spread costs: The buy/sell spread—the difference between a fund’s purchase and sale price—can be wider in some NTF offerings, particularly for less liquid asset classes.
- Limited fund choice: NTF funds are typically limited to a platform’s in-house or preferred provider range, which may not suit all investment strategies.
Consider this real-world scenario: In 2025, an investor using a zero-transaction-fee Australian equities fund with a 0.18% MER and a 0.10% spread could still pay less than a traditional fund charging 0.15% MER plus $10 per trade, especially with regular contributions. But for lump-sum investors or those seeking active management, the balance may tip the other way.
Who Should Consider No Transaction Fee Mutual Funds?
No transaction fee funds can be ideal for:
- First-time investors seeking low-cost entry and simplicity.
- Regular savers using dollar-cost averaging strategies.
- Passive investors comfortable with index-tracking funds.
They may be less suitable for investors who want access to a wide range of niche or actively managed funds, or for those who prefer to control every aspect of their portfolio. As always, comparing the true cost—including all fees and charges—is essential.
