Vanguard has reported lower expense ratios for 68 additional mutual fund and ETF shares, saving clients more than USD105 million.
Led by notable decreases in some of the industry’s largest international exchange-traded funds (ETFs), this third wave of reductions represents a cumulative USD143 million in savings across 124 fund shares reported over the last three months.
“While Vanguard is lowering – and will continue to lower – the cost of investing, the so-called fee war is essentially over on the beta battleground. Investors have won,” says Vanguard CEO Bill McNabb, who noted that broad market equity and bond exposure can be obtained for 10 basis points or less through index funds and ETFs. “The new fronts in the fee war are active management and advice. Again, investors will ultimately win.”
Vanguard has been lowering expense ratios across its product line-up, and all of its funds and ETFs are among the lowest cost in their respective categories. In fact, 99 per cent of Vanguard’s US-domiciled mutual funds fall within the industry’s lowest cost decile and 99 per cent of Vanguard’s US-domiciled ETFs fall within the lowest cost quartile of all ETFs.
“The demand for low-cost funds and ETFs, along with intense competition, have made investing far more affordable today than ever before,” adds McNabb. “With the broad availability of low-cost options, investors – whether on their own or with the help of a financial advisor or employer – need to focus on the other factors that can lead to investing success, including saving more, developing a suitable asset allocation, using broadly diversified funds, and maintaining discipline through market ups and down.”
Ten Vanguard international ETFs are reporting lower expenses, including five that are the largest in their category (VWO, VGK, VPL, VT, and BNDX) and two that are the second largest in their category (VNQI and VSS), as follows: Vanguard FTSE Emerging Markets ETF (VWO) declined one basis point to 0.14 per cent; Vanguard FTSE Europe ETF (VGK) declined two basis points to 0.10 per cent; Vanguard FTSE Pacific ETF (VPL) declined two basis points to 0.10 per cent; Vanguard Total World Stock ETF (VT) declined three basis points to 0.11 per cent; Vanguard Total International Bond ETF (BNDX) declined three basis points to 0.12 per cent; Vanguard Global ex-U.S. Real Estate ETF (VNQI) declined three basis points to 0.15 per cent; and Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) declined four basis points to 0.13 per cent.
Other notable changes in this latest round of expense ratio changes include the Admiral Shares of the actively managed Vanguard Intermediate-Term Tax-Exempt Fund, the industry’s largest municipal bond fund with USD50 billion in assets, which experienced a 25 per cent expense ratio reduction from 0.12 per cent to 0.09 per cent. The Admiral and Investor Shares of Vanguard’s factor offering, the USD1.6 billion Global Minimum Volatility Fund, experienced three and two basis point reductions to 0.17 per cent and 0.25 per cent, respectively. Vanguard’s relatively new municipal bond index ETF, Vanguard Tax-Exempt Bond Index ETF (VTEB), saw a 25 per cent expense ratio reduction from 0.12 per cent to 0.09 per cent.