Vanguard rolls out funds with 0.01% expense ratio

Vanguard rolls out funds with 0.01% expense ratio
The minimum investment is $5 billion for the stock fund, and $3 billion for the bond fund.
MAR 17, 2016
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.”

Latest News

GLP-1 users are trading retirement savings for their prescriptions
GLP-1 users are trading retirement savings for their prescriptions

A Nationwide survey finds 47% of GLP-1 users have never discussed the drugs’ financial impact with an advisor, even as many dip into savings.

Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors
Inspired Healthcare sale price of properties is 59% of $1.2 billion sold by advisors

The hundreds of millions of dollars from a sale of Inspired Healthcare properties does not mean an immediate windfall for investors.

Class action alleges Webull misled investors about China operations
Class action alleges Webull misled investors about China operations

Its SEC filings said one thing - a congressional probe said another.

Investors accuse Netcapital of inflating revenue through sham deals
Investors accuse Netcapital of inflating revenue through sham deals

Sham agreements allegedly padded revenue by 345%.

Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli
Pre-retirees are looking for flexibility, security, and guidance when it comes to retirement income: Cerulli

"Most pre-retirees are uncomfortable making key retirement income decisions without an advisor's help," said Chris Bailey of Cerulli.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor