An exchange-traded fund (ETF) and a managed fund both pool money from many investors into a single diversified portfolio run by a fund manager. The difference is mostly in how you access them and what they cost. This guide compares the two on fees, buying and selling, transparency and tax, for Australian investors weighing which structure fits their situation.
General information only, not financial advice. Figures are approximate and as at Q2 2026. ETFLens does not hold an Australian Financial Services Licence (AFSL).
Fees
Fees are the clearest difference. Broad index ETFs typically charge well under 0.30% per year: VAS (0.07% p.a.) tracks the S&P/ASX 300, A200 (0.04% p.a.) tracks the largest 200 Australian companies, and the global VGS (0.18% p.a.) tracks developed markets outside Australia. Actively managed funds, where a manager picks holdings in an effort to beat an index, commonly charge between 0.80% and 1.50% per year, and some add a performance fee on top. Because the fee is charged every year on your whole balance, a difference of one percentage point compounds into a large gap over decades. The fee analyser puts that gap in dollars for any holding period.
How you buy and sell
An ETF is listed on the ASX, so you buy and sell units through a broker during market hours at the live market price, the same way you trade a share. A traditional unlisted managed fund is bought directly from the fund manager: you complete an application form, the price is struck once per day from the fund's net asset value, and settlement can take several days. ETFs therefore give you intraday access and a known price at the moment you trade, while unlisted managed funds settle more slowly and at a once-a-day price.
Holdings transparency
ETF issuers publish their holdings regularly, often daily, so you can see exactly what the fund owns before you invest. ETFLens tracks live holdings for the most widely held ASX ETFs from these disclosures. Traditional managed funds usually disclose only their top holdings, and often only each quarter, so there is a longer lag between what the fund owns and what you can see. If knowing precisely what you hold matters to you, that visibility is a practical difference between the two.
Tax
Both structures pass through income and capital gains to investors each year, and both can trigger capital gains tax when you sell. ETFs use an "in-kind" creation and redemption process for large trades that can reduce the capital gains the fund itself distributes, while an actively managed fund with high portfolio turnover may realise and distribute more capital gains along the way. Tax outcomes depend on your own circumstances, marginal rate and holding period, which ETFLens cannot assess; consider your own situation or a registered tax agent.
Which structure fits
Neither structure suits everyone. An investor who values low cost, intraday trading and daily transparency may lean toward index ETFs, while an investor who specifically wants an active manager's strategy and accepts higher fees may prefer a managed fund (active ETFs now offer that strategy in a listed wrapper too). Whether either is appropriate depends on your goals, time horizon and circumstances, which ETFLens cannot assess. You can browse every ASX ETF by fee and category, or see the lowest-cost Australian shares ETFs ranked by management fee.