Vanguard Index Fund Expense Ratio Changes 2014

When you invest in a mutual fund or ETF, the fund company charges you a fee for managing that basket of stocks or bonds. These expenses are taken out via small reductions in the funds’ net asset value (NAV), and while the numbers can seem small they will compound quietly and relentlessly over time. Here are two illustrations from the Vanguard website:

Each percentage point in an expense ratio represents an annual charge of $100 against every $10,000 you invest in that fund. In other words, if you have $10,000 in a hypothetical fund with a 0.50% expense ratio, you’re charged $50 each year. So, a 0.15% expense reduction would save you $15, while a 0.15% increase would cost you an extra $15.

vger

Vanguard consistently drops what they charge to investors as their own costs drop. I’m using this post to keep track of their 2014 expense ratio change announcements, highlighting the more popular index funds that I watch for use in my own portfolio.

Fund Name Expense Ratio (Jan 2014) New Expense Ratio (Feb 2014)
Total International Stock ETF (VXUS) 0.16% 0.14%
FTSE Emerging Markets ETF (VWO) 0.18% 0.15%
Total World Stock ETF (VT) 0.19% 0.18%
Global ex-U.S. Real Estate ETF (VNQI) 0.32% 0.27%
FTSE All-World ex-US Small-Cap ETF (VSS) 0.25% 0.20%
Total US Stock ETF (VTI) 0.05% 0.05% (nc)
REIT ETF (VNQ) 0.10% 0.10% (nc)

 
Also note that ETF expense ratios usually match the Admiral shares of the respective mutual fund.

Announcements
February 2014
January 2014
December 2013

Comments

  1. Thanks for this post Jonathan. I just plugged the new ERs into my spreadsheet, and because of these changes, my portfolio’s weighted expense ratio has gone down from 0.11% to 0.10% – woohoo!

  2. I only use VXUS and VTI for my stocks to cover almost every stock and happy to see VXUS getting cheaper.

  3. You gotta love Vanguard! When we are conditioned to expect most other costs rise year after year it’s nice to see a company that works so hard to find ways to reduce costs.

    • They use economy of scale to save consumer money: the more people buy it, the cheaper it costs them and they pass savings to consumers to attract more people and increase savings in a virtuous cycle.

      On the other hand, the bigger companies like Comcast become the bigger is our bill! They don’t pass the savings but use their position as a monopoly to squeeze the consumers. I am sure though they dig their own grave: sooner or later consumer is going to revolt and by legislation or competition Comcast is going to suffer!

  4. VG is great, but don’t forget Schwab as a very strong alternative, definitely worth a look. Couldn’t be more pleased investing with them. No commission trading of over 100 ETF’s (including all of theirs), and expense ratios on their own ETF’s even lower than VG’s comparable ETF. The two companies are engaged in an all-out, race-to-the-bottom ETF expense ratio war. Which is great news for us, the ultimate beneficiaries.

  5. I agree. I love Vanguard but for an ESA, Schwab is really the only option due to their ETF’s cost/fees or lack thereof.

    Vanguard doesn’t offer ESA’s anymore.

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