VALLEY FORGE, PA (February 24, 2017)—Vanguard reported lower expense ratios today for 68 additional mutual fund and ETF shares, saving clients an estimated $109 million based on total assets across the funds in this round of expense ratio changes.1 Led by notable decreases in some of the industry’s largest international exchange-traded funds (ETFs), this third wave of reductions represents an estimated $142 million in cumulative savings based on total assets across 124 fund shares reported over the last three months.2
“While Vanguard is lowering — and will continue to lower — the cost of investing, the so-called fee war is essentially over on the beta battleground. Investors have won,” said Vanguard CEO Bill McNabb, who noted that broad market equity and bond exposure can be obtained for 10 basis points or less through index funds and ETFs. “The new fronts in the fee war are active management and advice. Again, investors will ultimately win.”
Vanguard has been lowering expense ratios across its product line-up, and all of its funds and ETFs are among the lowest cost in their respective categories. In fact, 99% of Vanguard’s US-domiciled mutual funds fall within the industry’s lowest cost decile and 99% of Vanguard’s US-domiciled ETFs fall within the lowest cost quartile of all ETFs.3
“The demand for low-cost funds and ETFs, along with intense competition, have made investing far more affordable today than ever before,” added McNabb. “With the broad availability of low-cost options, investors – whether on their own or with the help of a financial advisor or employer – need to focus on the other factors that can lead to investing success, including saving more, developing a suitable asset allocation, using broadly diversified funds, and maintaining discipline through market ups and down.”
Ten Vanguard international ETFs are reporting lower expenses, including five that are the largest in their category (VWO, VGK, VPL, VT, and BNDX) and two that are the second largest in their category (VNQI and VSS)4, as follows:
- Vanguard FTSE Emerging Markets ETF (VWO) declined one basis point to 0.14%.
- Vanguard FTSE Europe ETF (VGK) declined two basis points to 0.10%.
- Vanguard FTSE Pacific ETF (VPL) declined two basis points to 0.10%.
- Vanguard Total World Stock ETF (VT) declined three basis points to 0.11%.
- Vanguard Total International Bond ETF (BNDX) declined three basis points to 0.12%.
- Vanguard Global ex-U.S. Real Estate ETF (VNQI) declined three basis points to 0.15%.
- Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) declined four basis points to 0.13%.
Other notable changes in this latest round of expense ratio changes include the Admiral Shares of the actively managed Vanguard Intermediate-Term Tax-Exempt Fund, the industry’s largest municipal bond fund with $50 billion in assets, which experienced a 25% expense ratio reduction from 0.12% to 0.09%.5 The Admiral and Investor Shares of Vanguard’s factor offering, the $1.6 billion Global Minimum Volatility Fund, experienced three and two basis point reductions to 0.17% and 0.25%, respectively. Vanguard’s relatively new municipal bond index ETF, Vanguard Tax-Exempt Bond Index ETF (VTEB), saw a 25% expense ratio reduction from 0.12% to 0.09%.
Expense ratios represent the actual operating expenses for the prior fiscal year (including investment advisory fees, administrative costs, and shareholder-service expenses), meaning investors have already realized these savings by the time they are reported. Vanguard will announce any additional expense ratio changes as funds update their annual prospectuses in the coming months, in accordance with Securities and Exchange Commission requirements.
Vanguard is one of the world’s largest investment management companies. As of January 31, 2017, Vanguard managed more than $4 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 350 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.
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1Estimated savings for the identified funds is the difference between prior and current expense ratios multiplied by average AUM. Average AUM is based on daily average assets during a month, which are then averaged over the 12-months of the fiscal year ending October 31, 2016.
2Cumulative figure for all share classes from December 2016 through February 2017 for the identified funds. Estimated savings is the difference between prior and current expense ratios multiplied by average AUM. Average AUM is based on daily average assets during a month, which are then averaged over the 12-months of the fiscal year.
3Vanguard calculation based on reported expense ratios pulled from the most recent prospectuses via Morningstar. All share classes are included for mutual funds.
4Based on Morningstar categories as of December 31, 2016.
5Based on Morningstar categories and assets as of January 31, 2017.
All asset figures are as of December 31, 2016, unless otherwise stated.
Vanguard provides its services to the Vanguard funds at cost. More information about Vanguard funds, including at-cost services, is available in a fund’s prospectus.
For more information about Vanguard funds and ETFs, visit vanguard.com or call 800-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
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