Vanguard, the No. 3 U.S. ETF firm by assets, slashed expense ratios on 13 of its ETFs this week, including a nearly 17 percent cut on its Vanguard S&P 500 ETF (NYSEArca: VOO) and a 9 percent drop on its Vanguard Total Bond Market ETF (NYSEArca: BND). The company said in a press release that the moves reflected growth in assets or a drop in management costs of the funds.
The Valley Forge, Pa.-based company also lowered the expense ratio on its U.S.-focused Vanguard Total Stock Market ETF (NYSEArca: VTI) by more than 14 percent. Many of the fee cuts made the funds in question either cheapest in class or in the running to be the cheapest in their respective classes.
“A fund's expense ratio may change from year to year in response to changes in its assets and/or changes in the cost of managing it,” Vanguard said in press release posted on its website.
Vanguard doesn’t like to describe its low-cost strategy as part of a price war, but many ETF industry sources say that asset-gathering in the pure beta portion of the market will be fought in large measure on price. The only other firms focused as intensively on price as Vanguard are San Francisco-based Charles Schwab and FocusShares, a unit of St. Louis-based Scottrade.
The price cut on its aggregate bond fund BND, which became effective April 25, dropped the price of the ETF to 0.10 percent from 0.11 percent, matching the price of the Schwab U.S. Aggregate Bond ETF (NYSEArca: SCHZ).
The rest of the fee cuts were effective on April 26, including the one on its S&P 500 fund VOO, which now costs 0.05 percent compared with 0.06 percent before.
The cut bolstered VOO’s status as the cheapest S&P 500 fund on the market. State Street’s SPDR S&P 500 ETF (NYSEArca: SPY) costs 0.0945 percent, according to SSgA’s website.
The price cut on VOO also matches the 0.05 percent price tag on FocusShares’ Focus Morningstar US Market Index ETF: (NYSEArca: FMU), though FMU is perhaps more akin to Vanguard’s U.S. total market ETF “VTI,” which now costs 0.06 percent from 0.07 percent prior.
The 10 other expense ratio changes, which all became effective April 26, are as follows:
- Vanguard Extended Market ETF (NYSEArca: VXF), 0.14 percent from 0.16 percent
- Vanguard Growth ETF (NYSEArca: VUG), 0.10 percent from 0.12 percent
- Vanguard Large-Cap ETF (NYSEArca: VV), 0.10 percent from 0.12 percent
- Vanguard Mid-Cap Growth ETF (NYSEArca: VOT), 0.10 percent from 0.12 percent
- Vanguard Mid-Cap ETF (NYSEArca: VO), 0.10 percent from 0.12 percent
- Vanguard Mid-Cap Value ETF (NYSEArca: VOE), 0.10 percent from 0.12 percent
- Vanguard Small-Cap Growth ETF (NYSEArca: VBK), 0.10 percent from 0.12 percent
- Vanguard Small-Cap ETF (NYSEArca: VB), 0.16 percent from 0.17 percent
- Vanguard Small-Cap Value ETF (NYSEArca: VBR), 0.21 percent from 0.23 percent
- Vanguard Value ETF (NYSEArca: VTV), 0.10 percent from 0.12 percent
WBIG hedges in some areas and bets big in others.
Today the news is full of stories about the collapsing pound. Not so much.
Real-world tracking difference is incredibly important. So why does nobody look at it?
The latest SPIVA scorecard is pretty depressing news for active managers.