Assets and acquired fund fees are behind the latest revisions to ratios on VTI, VBR and VOE.
Vanguard, the third-largest U.S. ETF provider by assets, reported lower expense ratios effective immediately on two of its funds, including the $231 billion Vanguard Total Stock Market ETF (NYSEArca: VTI), and it also said the expense ratio on a third ETF has gone up.
VTI’s annual fee dropped 16.6 percent, to 0.05 percent a year, while the annual expense ratio on the $8.9 billion Vanguard Small Cap Value ETF (NYSEArca: VBR) fell 4.75 percent to 0.20 percent, or $20 for each $10,000 invested.
Meanwhile, the expense ratio on the $2.9 billion Vanguard Mid-Cap Value ETF (NYSEArca: VOE) is now higher—0.12 percent—a 20 percent increase from the previous fee of 0.10 percent.
VTI’s lower expense ratio seems to be the result of asset growth, as the fund broke through $230 billion in AUM in the past six months partly due to net inflows of more than $3.5 billion. Its share price gained 11.8 percent in that period.
The changes in costs in the other two funds are not linked to asset flows, but rather to changes in acquired fund fees and expenses tied to the funds’ investments in business development companies (BDCs).
“Although the SEC requires that BDC costs be included in a fund’s expense ratio, these fees are not incurred by the fund,” Vanguard said on its website. “They have no impact on a fund’s total return or on its tracking error relative to an index.”
Still, VBR and VOE have seen net inflows of $415 million and $387 million, respectively, in the past six months. The funds have also performed well, posting gains of 14.75 and 16.9 percent, respectively.