#271: Do fees still matter?

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Is the fees battle over?

Last week I spoke about the price war in ETFs. But do fees still matter?

For the passive market fees are surely at point where they almost don't matter. Sure they can go lower but we're talking most local ETFs now nicely below a 0.5% TER ratio while the offshore are slightly above 0.5%. Don't get me wrong, every 0.1% makes a difference, but on R100k that's R100. Not nothing but not the difference between retiring or not.

I still look at VOO with a TER of 0.04%, but we're never going to get that low (they're a mutual company and owned by the fund holders and have massive scale we'll never see in South Africa).

Admin fees, once a silent killer have also disappeared at some brokers where a simple ETF or tax-free account has zero admin fees.

Transaction fees are still a bug bear at some places with minimums that mean you need to trade some R18k-R30k per hit to get the effective rate.

We Get Mail

• Georges
  • I would like to find out how/when do ETFs collect their TER? Is this set off against distributions quarterly or “baked” into the price?
• Helen
  • What will happen to my preference shares with Basil III? Will I loose them?

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