While I’m catching up on my index fund updates, below is a list of all the expense ratio updates from Vanguard mutual funds and ETFs for both 2012 and 2013 year-to-date. Vanguard continues to consistently drop what they charge to investors as their own costs drop. But first, a quick expense ratio definition taken from their website is below.
Each percentage point in an expense ratio represents an annual charge of $100 against every $10,000 you invest in that fund. A hypothetical fund with a 0.50% expense ratio charges its shareholders $50 for every $10,000 invested, so a reduction from 0.50% to 0.25% would represent a savings of $25 for every $10,000 you’ve invested.
These expenses are taken out in fractional amounts every day and reduce the fund’s net asset value (NAV). The numbers may seem small if you’re a beginning investor, but they will compound quietly and relentlessly over time. Don’t underestimate the importance of maintaining low-costs in your long-term return.
Announcements & Notable Changes
- February 2012 announcement. Vanguard Emerging Markets Stock Index, FTSE All-World ex-US Index, Total International Stock Index, and Total World Stock Index funds amongst others had share classes with expense ratio drops.
- March 2012 announcement. The Wellington fund had an expense ratio drop. Founded in 1929, Wellington is Vanguard’s oldest mutual fund and the nation’s oldest balanced fund.
- April 2012 announcement. Vanguard Inflation-Protected Securities Fund, Total Bond Market Index Fund, 500 Index Fund, Balanced Index Fund, Extended Market Index Fund, Small-Cap Value Index Fund, Total Stock Market Index Fund, and Value Index Fund had share classes with expense ratio drops.
- May 2012 announcement. Vanguard REIT Index Fund, and Vanguard’s Short / Intermediate / Long-Term Investment-Grade Funds, Vanguard’s Short / Intermediate / Long-Term Treasury Funds, and a few other bond funds had expense ratio drops.
- December 2012 announcement. The expense ratios on their money market funds went down, although yields are still microscopic. Short / Intermediate / Long-Term Corporate Bond Index ETF and several other sector ETFs had expense ratio drops.
- January 2013 announcement. A lot of actively-managed funds were updated; most went down in cost, a few went up. Notably, the Target Retirement 2010-2055 Funds saw their expense ratio drop by a basis point to 0.16%-0.18%.
- February 2013 announcement. The expense ratio on the High Dividend Yield Index ETF went down to 0.10%. When you buy an dividend ETF, you need that lower expense ratio as otherwise you’re just giving a huge chunk of your dividends away. I just hate the idea of being charged 0.20% or higher when I could just hold the companies individually.