Vanguard Announces ETF Fee Cuts
Changes affect mostly fixed-income ETFs and are mainly the result of increased assets under management.
Mutual fund and ETF giant Vanguard has announced fee cuts on a number of its funds, including 11 ETFs, for the 2016 fiscal year ended in August. In the press release, Vanguard CEO Bill McNabb emphasized that these expense ratio reductions were just “business as usual” rather than the latest shots fired in the ETF fee war.
Vanguard tends to raise and lower expense ratios based on a fund’s assets under management, as economies of scale mean the greater an index fund’s assets, the cheaper it is to manage.
Most of the reductions were related to Vanguard’s bond funds, with eight ETFs seeing their expense ratios fall by 3 basis points. Fixed-income ETFs throughout the ETF industry saw significant inflows this year. The firm’s three “Mega Cap” ETFs also saw their expense ratios lowered by 2 basis points each, and the health care sector ETF’s fee was raised by 1 basis point.
| Fund | Ticker | Old ER | New ER | BPS Change |
| Vanguard Extended Duration | EDV | 0.10% | 0.07% | -3 |
| Vanguard Intermediate-Term Corporate Bond | VCIT | 0.10% | 0.07% | -3 |
| Vanguard Intermediate-Term Government Bond | VGIT | 0.10% | 0.07% | -3 |
| Vanguard Long-Term Corporate Bond | VCLT | 0.10% | 0.07% | -3 |
| Vanguard Long-Term Government Bond | VGLT | 0.10% | 0.07% | -3 |
| Vanguard Mortgage-Backed Securities | VMBS | 0.10% | 0.07% | -3 |
| Vanguard Short-Term Corporate Bond | VCSH | 0.10% | 0.07% | -3 |
| Vanguard Short-Term Government Bond | VGSH | 0.10% | 0.07% | -3 |
| Vanguard Mega Cap Growth | MGK | 0.09% | 0.07% | -2 |
| Vanguard Mega Cap | MGC | 0.09% | 0.07% | -2 |
| Vanguard Mega Cap Value | MGV | 0.09% | 0.07% | -2 |
| Vanguard Health Care | VHT | 0.09% | 0.10% | 1 |
Contact Heather Bell at [email protected].
