Vanguard Goes Low (Again) with this Important Participant Metric

Vanguard Fund Expense Reduction

Another low cost 'gift' from Vanguard.

Vanguard reported lower expense ratios today for 15 mutual fund shares last week, including the industry’s largest balanced fund. As a result, it noted, investors in these funds saved an estimated $23 million.

It’s the fourth of six planned announcements, according to the investment giant, and claims that to date, Vanguard has reported an estimated $165 million in cumulative savings across 139 index and actively managed fund and ETF shares.

“We’re pleased to continue lowering the cost of investing for our clients, as low costs are absolutely critical to long-term investment success,” Vanguard CEO Bill McNabb said in a statement. “Low fees are the starting point – the first filter in selecting investments. However, we remind investors there are other considerations in selecting a fund and an investment provider as well as other factors that strongly influence outcomes.”

Investor outcomes are particularly sensitive to savings rates, especially over the long term.

For example, it explained in a bit of quick math that increasing one’s savings rate by 1 percent has a far more profound impact than paying 1 basis point less in fees. Over 30 years, a 1 percent higher savings rate results in $65,000 in additional assets, compared to the $700 savings stemming from a 1 basis point difference in expense ratios (assuming an investor has a starting salary of $100,000, an investment growth rate of 5 percent, and a salary increase of 1 percent annually).

Active Tax-Exempt Funds Lead Reductions

Active Balanced Funds Announce Reductions

Three actively-managed fund shares also reported expense ratio decreases this month. The $98 billion Vanguard Wellington Fund Investor (VWELX) and Admiral (VWENX) shares declined one and two basis points to 0.25 percent and 0.16 percent, respectively. The expense ratio of the $1.5 billion Vanguard Convertible Securities Fund (VCVSX) declined four basis points to 0.3

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