Market Overview

Vanguard Ups The Ante In ETF Fee War


In case investors needed more convincing that ETFs trounce mutual funds when it comes to costs the evidence has arrived and it comes courtesy of Vanguard. Yes, that Vanguard. The one that's one of the largest U.S. mutual fund companies and also the third-largest U.S. ETF sponsor.

Vanguard announced fee cuts for 13 of its ETFs with the expense ratios on many of these products heading from paltry to almost non-existent levels. Some of the reductions went into effect today, while the others took effect on Wednesday.

Here's what in store regarding lower fees for Vanguard investors: The Vanguard Total Bond Market Index Fund (NYSE: BND), one of the largest U.S. bond funds, goes to 0.1% from 0.11%.

The Vanguard S&P 500 ETF (NYSE: VOO) will now charge 0.05% down from 0.06%. That compares to 0.09% for the SPDR S&P 500 (NYSE: SPY).

The Vanguard Extended Market Index Fund (NYSE: VXF) goes to 0.14% from 0.16%.

The Vanguard Growth Index Fund (NYSE: VUG) pares its fees to 0.1% from 0.12%.

The Vanguard Large-Cap Index Fund (NYSE: VV) lowers its fees to 0.1% from 0.12% as do the Vanguard Mid-Cap Growth Index Fund (NYSE: VOT), the Vanguard Mid-Cap Value Index Fund (NYSE: VOE), the Vanguard Mid-Cap Index Fund (NYSE: IVOO) and the Vanguard Value Fund (NYSE: VTV).

The Vanguard Small-Cap Index Fund (NYSE: VB) shrinks its fees to 0.16% from 0.17%.

The Vanguard Small-Cap Value Index Fund (NYSE: VIOV) goes to 0.21% from 0.23%.

The Vanguard Total Stock Market ETF (NYSE: VTI) now charges 0.06% down from 0.07%.

Vanguard's move to slash expense ratios follows a similar move by rival State Street Global Advisors, which pared expenses on the Select Sector SPDRs earlier this year, and indicates some of the large ETF providers are willing to resort to bare-bones fees in an effort to attract and keep investors' assets.

At the end of March, SSgA and Vanguard controlled about $504 billion of the roughly $1.2 trillion in U.S. exchange-traded products assets and the rivalry between the two firms for second place on the AUM list behind BlackRock's (NYSE: BLK) iShares is seen as intensifying. iShares had almost $500 billion in AUM at the end of March, so the current ETF AUM battle really is for second place and it appears investors are the real winners as Vanguard attempts to take the silver medal from SSgA.

Posted-In: Long Ideas News Sector ETFs Bonds Broad U.S. Equity ETFs Short Ideas Specialty ETFs Intraday Update


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