Vanguard fires another salvo in the fee war

The nation's largest fund company lowers fees on three mutual funds and 14 ETFs; raises fees on one fund
APR 28, 2017
Vanguard announced another round of fee reductions today as the mutual fund price war rages on. The nation's largest fund company lowered the expense ratio on four share classes of the nation's largest mutual fund, the $550-billion Vanguard Total Stock Market Index (VTSMX) fund: • ETF share class (VTI) saw its expense ratio fall 0.01 percentage point, or one basis point, to 0.04% • Institutional share class (VITSX) shed half a basis point to 0.035% • Admiral share class (VTSAX) fell one basis point to 0.04% • Investor share class slid one basis point to 0.15% The $310-billion Vanguard 500 Index Fund (VFINX) also saw fee reductions: • Admiral share class (VFIAX): one basis point to 0.04%. • ETF share class (VOO): one basis point to 0.04%. • Investor share class: two basis points to 0.14%. The $178-billion Vanguard Total Bond market index fund cut its expense ratio by one basis point across all five share classes. Vanguard also cut expenses on 14 ETFs: FTSE Developed Markets (VEA), Value (VTV), Growth (VUG), Short-Term Bond (BSV), Mid-Cap (VO), Small-Cap (VB), Intermediate-Term Bond (BIV), Large-Cap (VV), Small-Cap Value (VBR), Mid-Cap Value (VOE), Small-Cap Growth (VBK), Extended Market (VXF), Long-Term Bond (BLV), and Mid-Cap Growth (VOT). Vanguard also announced fee increases to both the retail and institutional shares classes of its Vanguard Market Neutral Fund (VMNFX) and (VMNIX), respectively. Fees on those share classes jumped 14 and 16 basis points, respectively, to 1.60% and 1.52%. So far, none of Vanguard's competitors, such as Fidelity Investments and Charles Schwab & Co., have announced similar reductions, although they have been swift to do so in the past. Dan Wiener, editor of The Independent Adviser for Vanguard Investors, a newsletter, noted that at current levels, fee reductions start to lose their meaning. "When you get to the single digits, it's hard to keep cutting and the gains are di minimus." For an investor with $10,000 in Vanguard Total Stock Market ETF, for example, the savings amount to $1.

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