Vanguard ups expense ratios for 29 funds

Reacting to asset declines from the market downturn, The Vanguard Group Inc. is increasing expense ratios. The Malvern, Pa.-based firm disclosed the increases for 29 of its funds. The average increase is 0.05%, Vanguard spokeswoman Rebecca Cohen said. That amounts to $5 on a $10,000 investment, she said. “There are fees we charge to run the funds,” Ms. Cohen said. “When the asset base shrinks, the fees represent a larger percentage of the expense ratio.” To date, Vanguard has released prospectuses of 30 of its 110 funds. More will be released during the year, but it is difficult to determine how many additional funds will have increases, Ms. Cohen said. Assets at the firm dropped to $950 billion as of Feb. 28, compared with $1.2 trillion in February 2008. “We expect many of our funds' expense ratios to increase modestly in 2009,” Ms. Cohen said. This isn't the first time the firm has raised its expense ratios. Following the last bear market [2002-03], Vanguard raised the expense ratio on many of its funds slightly, Ms. Cohen said. “Over time, the expense ratio came back down,” she said. “Our long-term goal is to reduce the expense ratio over time.”