Vanguard claims $250M win for mutual fund investors with latest fee cuts

Vanguard is extending its cost-cutting streak with another round of expense ratio reductions that will trim nearly $250 million in fees for investors this year and deepen pressure on rivals across the fund industry.

The firm said it has lowered expense ratios on 84 mutual fund and ETF share classes across 53 funds, with an average reduction of 27% for products receiving cuts in 2026. The changes touch roughly one-quarter of Vanguard’s lineup and span equity, fixed income, money market and multi-asset strategies.

Taken together with a head-turning reduction in fees it announced a year ago, Vanguard has now delivered close to $600 million in fee savings over the past two years—its largest combined cut over such a period. The firm said its product lineup across all asset classes and styles now carries an average expense ratio of 0.06%, underscoring its push to keep costs at the low end of the market.

“Vanguard is investor-owned – we have no outside stockholders or inside owners profiting from our clients,” Salim Ramji, Vanguard’s chief executive officer, said in an announcement Monday.

He characterized the latest round of reductions, totaling more than half a billion dollars over two years, as “a clear expression of our purpose and commitment to our clients as owners.”

The cuts arrive as investor demand and regulatory scrutiny continue to push fees lower industrywide. According to the most recent fund fee research from the Investment Company Institute, the average asset‑weighted expense ratio for equity mutual funds fell from 1.04% in 1996 to 0.40% in 2024, while bond mutual fund expenses dropped from 0.84% to 0.38% over the same period. The shift has been driven in part by the migration to no‑load funds and index products, as well as investors’ preference for lower‑cost share classes.

Vanguard argues that its cost advantage is now embedded across much of its shelf. By its own estimation, 75% of its funds and 85% of its ETFs are priced in the lowest-cost decile of their categories. On an asset‑weighted basis, it says its funds charge 0.06% versus an industry average of 0.38%, and its fixed income lineup charges 0.06% versus 0.35% for competitors, with active and index fixed income products both priced meaningfully below peers.

The latest cuts include the firm’s US equity nine‑box ETF suite, such as the Growth ETF (VUG) and Value ETF (VTV), along with large‑, mid‑, and small‑cap growth, value, and blend strategies. Fees also fell on the FTSE Emerging Markets ETF (VWO) and dividend‑oriented US equity ETFs, including the Dividend Appreciation ETF (VIG) and High Dividend Yield ETF (VYM).

Vanguard links its pricing to beneficial long‑term outcomes, noting that 84% of its funds have outperformed their peer‑group averages over the past decade, including 88% of its active fixed income funds. The firm leaned into the position famously advanced by its iconic founder, John Bogle, that lower all‑in costs allow a greater share of gross returns to reach end clients, which can improve compounding over time.

“Vanguard helped pioneer the modern index fund, and the principles behind that innovation remain core to our approach today: broad diversification, transparency, and disciplined, long‑term investing,” said Greg Davis, Vanguard president and chief investment officer. Indexing, he said, was once seen as unconventional but has become “an indispensable tool for millions of investors.”