There will always be debate regarding investing in actively-managed stock pickers vs. passive index followers. But even for active managers, costs matter more than star ratings and past performance. The lower the expenses, the less headwind year in and year out.
The best thing about using Vanguard funds is that they have consistently lowered my investment fees over time as their own costs have dropped. When that happens, it’s like getting guaranteed higher returns that continue to compound each year.
Last year, they lowered the fees on several funds and also added Admiral shares. Last month, they dropped some fees on their Emerging Markets fund. Most recently, they announced another round of expense ratio cuts. Check the article for all the funds, but here are the ones that I hold:
|Funds In My Personal Portfolio||Old expense ratio||New expense ratio|
|Vanguard Emerging Markets Stock Index Fund (Investor shares)||0.35%||0.33%|
|Vanguard Emerging Markets Stock Index Fund (ETF/Admiral)||0.22%||0.20%|
|FTSE All-World ex-US Index (ETF)||0.22%||0.18%|
|Total International Stock Index (Investor shares)||0.26%||0.22%|
|Total International Stock Index (ETF/Admiral)||0.20%||0.18%|
The total weighted expense ratio of my investments is probably under 0.20% annually now. The only way to go lower is to hold the stocks or bonds directly in a brokerage account, and even then I have consider commission charges.
By Jonathan Ping | Investing | 3/21/12, 2:20am