One of the primary reasons advisors and investor love Vanguard exchange traded funds are the low fees. Pennsylvania-based Vanguard, the third-largest U.S. ETF issuer, has some of the lowest fees in the ETF business, and the company has consistently shown during its time in the ETF industry that as its funds swell in size, it will pare annual expense ratios.
Forgive the Christmas comparison, but Santa arrived a few days early for Vanguard investors this year as the company said Tuesday it is lowering fees on 21 of its ETFs. That includes Vanguard's group of 10 sector ETFs. With the new, lower fees, Vanguard undercuts rival Fidelity as having the least expensive sector ETFs on the market today.
Previously, Vanguard sector ETFs charged 0.12 percent a year, or $12 per $10,000 on its sector ETFs. Now, the Vanguard Health Care ETF VHT sports an annual fee of just 0.09 percent while other popular Vanguard sector offerings, such as the Vanguard Information Technology ETF VGT and the Vanguard Consumer Staples ETF VDC, will charge 0.1 percent per year. VGT is known for having one of the largest weights to Apple Inc. AAPL among all ETFs.
“Vanguard continues to set the standard as the industry’s low-cost leader, reducing costs not just on a subset of products, but across our funds and ETFs,” said Vanguard CEO Bill McNabb in a statement. “We have a track record of nearly 40 years of lowering the cost of investing for our clients and we have every intention of continuing to lower the cost of investing.”
Eight fixed income ETFs issued by Vanguard also saw annual fees reduced by 17 percent to 0.1 percent from 0.12 percent. The group includes the Vanguard Long-Term Corporate Bond ETF VCLT, Vanguard Long-Term Government Bond ETF VGLT, Vanguard Mortgage-Backed Securities Index ETF VMBS and the Vanguard Intermediate-Term Bond ETF BIV.
Vanguard also announced lower fees on its mega-cap style ETFs. The Vanguard Mega Cap ETF MGC and the Vanguard Mega Cap Value ETF MGV now charge 0.06 percent per year, down from 0.08 percent, while the Vanguard Mega Cap Growth ETF MGK is charging 0.08 percent, down from 0.1 percent.
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