Vanguard rolls out funds with 0.01% expense ratio

For high rollers only: Minimum investment is $5 billion for the stock fund

Jan 29, 2016 @ 10:57 am

By John Waggoner

Vanguard just squeezed its fees a little tighter — a move that could prompt further fee reductions by other fund companies.

The biggest eye-opener: A new share class of Vanguard Total Stock Market Index and Total Bond Market Index with operating expenses of 0.01%. But the minimum investment is $5 billion for the stock fund and $3 billion for the bond fund.

“Essentially, Vanguard wants to run institutional money for free,” said Dan Wiener, editor of The Independent Adviser for Vanguard Funds. “Pension funds will love this.”

Vanguard also lowered expenses on all of its target-date funds by 0.02 percentage points, and its Target Retirement 2035 fund by 0.03 percentage points. The $41.2 billion Vanguard Wellesley Income Fund's expense ratio dropped 0.02 percentage points to 0.23%, and its Admiral Shares fell 0.02 percentage points to 0.16%.

All told, Vanguard dropped expenses on 35 individual mutual fund shares.

“We strongly believe in setting our investors up for success, and one of the best ways to do that is to keep the cost of investing low, enabling them to keep more of what they earn,” said Vanguard CEO Bill McNabb. “The compounding effect of high costs is especially corrosive to the returns of retirement investors — those saving over 30 to 40 years in a 401(k) plan or through an IRA. As a result, low costs, along with high savings rates, are critical to the retirement readiness of millions of Americans.”

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Children of AI, and when they are coming to financial advice

Technology reporter Ryan Neal talks about the tremendous progress in artificial intelligence in other industries, and how its applications are slowly making headway in the advice sector.

Latest news & opinion

SEC advice rule hearing updates

Commission says a lot of work ahead, public will have 90 days to comment.

SEC advice proposal unveiling: Here's what to expect

Chairman Jay Clayton will initiate momentous action Wednesday, as the commission meets to debate a rule on broker and adviser standards.

How active are the largest actively managed funds?

Active-share measures for the 15 largest actively traded mutual funds.

Morgan Stanley's success looks long in the tooth to analyst

Sanford C. Bernstein & Co. analyst Christian Bolu, concerned over stalled adviser growth and what it means for lending and deposit growth, believes the stock will "under perform."

Retirement coverage gap, 401(k) rollovers are big emerging threats for plan advisers

Proliferation of state retirement programs approaching the 'tipping point' where it will lead the federal government to step in.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print