Money, meet mouth. Vanguard has preached the value of low-cost investing since Gerald Ford was president, and the company continued in evangelical mission on Tuesday by reporting expense ratio reductions on a host of mutual funds and ETFs.
The result? According to the company, its shareholders saved a total of $12.4 million as a result of lower expense ratios on 53 individual mutual fund shares, including 21 exchange-traded fund shares.
“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,” Vanguard CEO Bill McNabb said 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.”
About that history; the company notes that in 1975, when Vanguard managed $1.8 billion in U.S. fund assets, the average expense ratio for the Vanguard funds was 0.89%. Today, Vanguard manages $3.2 trillion in U.S. fund assets and the average expense ratio is 0.18%. (on an asset-weighted basis, the average expense ratio is even lower, at 0.14%).
In 2004, when Vanguard managed $6 billion in ETF assets, the average expense ratio for Vanguard’s ETFs was 0.22%. Today, Vanguard manages $484.7 billion in U.S. ETF assets and the average expense ratio is 0.13% (on an asset-weighted basis, the average expense ratio is even lower, at 0.10%). As of November 30, 2015, Vanguard managed more than $3.4 trillion in global assets.
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.
