Vanguard has lowered expense ratios for 15 mutual fund shares, including the industry’s largest balanced fund.
As a result, investors in these funds saved an estimated USD23 million.
To date, Vanguard has reported an estimated USD165 million in cumulative savings across 139 index and actively managed fund and ETF shares.
“We’re pleased to continue lowering the cost of investing for our clients, as low costs are absolutely critical to long-term investment success,” says Vanguard CEO Bill McNabb (pictured). “Low fees are the starting point – the first filter in selecting investments. However, we remind investors there are other considerations in selecting a fund and an investment provider as well as other factors that strongly influence outcomes.”
Investor outcomes are particularly sensitive to savings rates, especially over the long term. For example, increasing one’s savings rate by 1 per cent has a far more profound impact than paying 1 basis point less in fees.
Over 30 years, a 1 per cent higher savings rate results in USD65,000 in additional assets, compared to the USD700 savings stemming from a 1 basis point difference in expense ratios (assuming an investor has a starting salary of USD100,000, an investment growth rate of 5 per cent, and a salary increase of 1 per cent annually).
