Vanguard Drops The Hammer In ETF Fee War With 21 Price Cuts

Vanguard, the second-largest U.S. issuer of exchange traded funds, is again wielding its low-cost sword.

On April 26, Vanguard said it's lowering fees on 21 of its ETFs, including its two largest funds, the Vanguard S&P 500 ETF VOO and the Vanguard Total Stock Market ETF VTI.

What Happened

VTI and VOO are the third- and fourth-largest U.S.-listed ETFs, respectively, and are two of the four ETFs with more than $100 billion in assets under management. The $114.79 billion VTI is now charging 0.03 percent year, or $3 on a $10,000 investment, down from 0.04 percent. The $112.94 billion VOO also saw its annual fee reduced to 0.03 percent from 0.04 percent.

Including VOO and VTI, Vanguard announced lower fees on eight domestic ETFs. The following ETFs saw their fees reduced to 0.04 percent from 0.05 percent: The Vanguard Growth ETF VUG, the Vanguard Value ETF VTV, the Vanguard Large-Cap ETF VV and the Vanguard Mid-Cap ETF VO.

The Vanguard Extended Market ETF VXF saw its annual fee pared to 0.07 percent from 0.08 percent while the Vanguard High Dividend Yield ETF VYM is charging 0.06 percent, down from 0.08 percent.

Why It's Important

As issuers have reduced fees across product lineups, international funds have steadily gotten cheaper. Nine international equity ETFs are part of the latest round of Vanguard fee reductions.

The following funds are now charging 0.09 percent, down from 0.10 percent: the Vanguard Total World Stock Market ETF VT, the Vanguard FTSE Europe ETF VGK and the Vanguard FTSE Pacific ETF VPL.

The Vanguard Total International Stock ETF VXUS and the Vanguard FTSE All-World ex-US ETF VEU are now charging 0.09 percent, down from 0.11 percent.

The $72.16 billion Vanguard FTSE Developed Markets ETF VEA, the sixth-largest U.S.-listed ETF, saw its fee reduced to 0.05 percent from 0.07 percent, while the Vanguard FTSE All-World ex-US Small-Cap ETF VSS saw a modest fee reduction of one basis point to 0.12 percent.

The Vanguard FTSE Emerging Markets ETF VWO and the Vanguard Global ex-U.S. Real Estate ETF VNQI both now charge 0.12 percent annually, down from 0.14 percent. Home to $65.35 billion in assets under management, VWO is the world's largest emerging markets ETF.

What's Next

Vanguard also lowered the fees on four fixed income ETFs. The Vanguard Emerging Markets Government Bond ETF VWOB now charges 0.30 percent, down from 0.32 percent. The Vanguard Total International Bond ETF BNDX also a fee cut of two basis points to 0.09 percent.

The Vanguard Total Bond Market ETF BND and the Vanguard Tax-Exempt Bond ETF VTEB, Vanguard's first municipal bond ETF, both lowered fees by one basis point.

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