How low can they go? Vanguard investors saved nearly $55 million as a result of lower expense ratios for 42 mutual fund shares, including seven ETFs and four target-risk funds, the company claimed Friday. This marks the third round of Vanguard funds to report expense ratio changes for fiscal-year 2015, resulting in savings of nearly $142 million to date for investors in 130 fund shares.
“The continued adoption of the Vanguard way of investing, coupled with asset growth related to favorable financial markets, enables us to reduce the cost of investing for all our investors, from financial advisors and institutional investors to IRA savers and 529 plan holders,” Vanguard CEO Bill McNabb said in a statement. “While Vanguard has some of the lowest-cost mutual funds and ETFs in the industry, low costs have not come at the expense of providing competitive investment performance, a broad array of funds and other services, and a high level of client service.”
The reported expense ratio reductions span a range of fund share classes (Investor, Admiral ETF, Institutional, and Institutional Plus) for the 12 months ended October 31, 2015, in seven fund categories: international stock index, international actively managed stock, international bond index, domestic stock index, domestic actively managed stock, target-risk, and tax-exempt money market.
Six Vanguard international ETFs, which enable advisors to incorporate broad-based international exposure into their clients’ investment portfolios at a low cost, reported reductions:
- The $12.4 billion Vanguard FTSE All-World ex-US ETF reported an expense ratio reduction of 7%.
- The $5.4 billion Vanguard Total World Stock ETF reported an expense ratio reduction of 18%.
- The $4.9 billion Vanguard Total International Stock ETF reported an expense ratio reduction of 7%.
- The $4.5 billion Vanguard Total International Bond ETF reported an expense ratio reduction of 21%.
- The $2.9 billion Vanguard Global ex-U.S. Real Estate ETF reported an expense ratio reduction of 25%.
- The $2.3 billion Vanguard FTSE All-World ex-US Small-Cap ETF reported an expense ratio reduction of 11%.
The $11.3 billion Vanguard High Dividend Yield ETF, a domestic equity offering, also reported an expense ratio reduction of 10%.
Seven funds with Admiral Shares, which are available to advisors without a minimum initial investment, also reported expense ratio reductions. Among these funds were a number of actively managed funds, including the $42.5 billion Vanguard Windsor II Fund and the $10.0 billion Vanguard Explore Fund.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.