Daily ETF Watch: Firms Cut Fees

March 02, 2015

Vanguard, always known to be a low-fee ETF provider, has trimmed the fees on six of its most widely used ETFs. The new fees, each 1 basis point lower than before, are included in the information below:

Vanguard ETF Fee Cut (bps) New Expense Ratio Assets ($B)
Emerging Markets Government Bond (VWOB | C-39) 1 0.34% 0.3
FTSE All-World ex-US (VEU | B-98) 1 0.14% 12.9
FTSE All-World ex-US Small-Cap (VSS | B-90) 1 0.19% 2.2
Global ex-U.S. Real Estate (VNQI | B-75) 3 0.24% 2.5
Total International Bond (BNDX | B-57) 1 0.19% 3.6
Total World Stock (VT | A-100) 1 0.17% 4.1


All but one of the fee cuts became effective on Feb. 26; VWOB's new expense ratio became effective Feb. 25. The price reductions are a result of the firm's economies of scale: As funds gather assets, their expenses tend to go down in proportion to the amount of money managed. Vanguard returns that saved money to its investors through expense ratios cuts.


Charles & Fidelity Cut Fee Too

Charles Schwab and Fidelity also trimmed fees on two funds.


The $278million Schwab Intermediate-Term U.S. Treasury ETF (SCHR | A-67) saw its fee cut by just 1 basis point to 0.09 percent, according to a recent filing. That puts it just below the SPDR Barclays Intermediate Term Treasury ETF (ITE | A-99), which still costs 10 basis points; SCHR is now the cheapest fund in that particular space.


Meanwhile, Fidelity lowered the expense ratio for the Fidelity MSCI Financials ETF (FNCL | A-95) by 4 basis points to 0.12 percent. That's a quarter of its former cost, and the cut brings it in line with the costs of the other 10 Fidelity sector ETFs. The change is a result of business development companies being removed from the fund's portfolio in accordance with changes in its underlying index, a filing said.


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