Vanguard Slashes Investing Fees, Saving Investors Millions: 'The Larger We Become, The Lower It Goes'

Asset manager Vanguard on Monday announced that it was slashing the fees associated with investing in its funds, saving investors up to $350 million in 2025 alone.

What To Know: Vanguard has lowered the expense ratio across 87 of its funds, bringing its average asset-weighted fee down to just 0.07% versus an industry average of 0.44%, according to Bloomberg.

The fee reductions, which became effective Feb. 1 and were announced in a news release Monday morning, represent the largest cut Vanguard has ever made. The cuts will lower investment costs for bond mutual funds, ETFs, U.S. equity, international equity and money market funds.

“Lower fees mean fund investors can keep more of their returns and a competitive edge for our funds,” said Greg Davis, chief investment officer at Vanguard.

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Vanguard has reduced its expense ratios more than 2,000 times since 1975 and was already one of the cheapest operators before the latest cuts. Following the cuts, 86% of Vanguard mutual fund and ETF assets are in the lowest-cost deciles of their peer group.

According to Bloomberg, Vanguard ETFs brought in $305 billion of inflows last year, which was close to an all-time high for the asset manager.

"After paying for technology and investments that we need to make in the company, the way we effectively give the value back to our clients — who are also our owners — is through fee cuts. The larger we become, the lower it goes," Vanguard CEO Salim Ramji, reportedly told Bloomberg.

The cuts are specifically attractive for investors looking to increase exposure to fixed income. Vanguard’s average weighted fee on its actively managed bond funds is now down to 0.1% versus an industry average of about 0.52%.

The report indicates that Vanguard recently released a 10-year outlook showing that it expects U.S. bonds to outperform U.S. equities over the next decade.

"Even if we're wrong, people's portfolios are out of balance and they need more bonds in there, even just as a ballast to diversify back to 60/40. But as they do that, they don't need to pay 50 basis points,” Ramji reportedly said.

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