Vanguard ETF and Mutual Fund Expense Ratios (Last Updated May 2016)

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May 2016 Update. Added announcement links for April 2016, which included expense ratio reductions in their biggest and most popular funds. Highlights from this latest update:

  • Vanguard Total Stock Market Index Fund. The largest stock fund, with $418.0 billion in assets, reported an expense ratio reduction for Investor Shares of one basis point, to 0.16%.
  • Vanguard 500 Index Fund. The second-largest stock fund and the industry’s oldest stock index fund, with $227.5 billion in assets, reported an expense ratio reduction for Investor Shares of one basis point, to 0.16%.
  • Vanguard Total Bond Market Index Fund. The world’s largest bond fund, with $158.0 billion in assets, reported expense ratio reductions for Investor Shares of four basis points, to 0.16%; for Admiral™ Shares of one basis point, to 0.06%; for ETF Shares of one basis point, to 0.06%.
  • Vanguard Total Bond Index II Fund. The second-largest bond fund, with $96.3 billion in assets, reported expense ratio reductions for Investor Shares of one basis point, to 0.09%, and for Institutional Shares of three basis points, to 0.02%. (This fund is only available inside
  • Many other ETFs had slight price drops, for example the Small Cap Value ETF (VBR) and Admiral Shares dropped to 0.08%.
  • Vanguard clients now pay an average asset-weighted expense ratio (the average shareholders actually pay) of 0.13%.

Background. When you invest in a mutual fund or ETF, the fund company charges you a fee for managing that basket of stocks or bonds. This is called the annual net expense ratio, usually expressed as a percentage. If you hold a steady $10,000 in a hypothetical fund with a 1% expense ratio, that would result in an annual charge of $100. These expenses are actually deducted daily day from the funds’ net asset value (NAV), and while the numbers can seem small they will compound quietly and relentlessly over time. Here is an illustration from the Vanguard website:

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Vanguard has a long history of lowering their expense ratios as their assets under management grow, whereas the industry average hasn’t changed very much.

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You don’t need to track every little change as an investor, but I subscribe to updates of their expense ratio change announcements anyway. Vanguard runs their funds “at cost”, so sometimes as their costs go up, the expense ratios can also rise a bit. I’ll try to keep this list updated, along with some brief highlights.

2015/2016 Announcement Links

  • April 2016. Lower expense ratios for 88 mutual fund and ETF shares.
  • February 2016. Lower expense ratios for 42 mutual fund and ETF shares.
  • January 2016. Lower expense ratios for 35 mutual fund and ETF shares.
  • December 2015. Lower expense ratios for 53 mutual fund shares, including 21 ETFs.
  • May 2015. REIT Index fund expense ratios went up. VNQ went up to 0.12%.
  • April 2015. Total Bond Market ETF (BND) and Total Bond Market Index Admiral Shares (VBTLX) dropped to 0.07%.
  • March 2015. Only one change: Lower expense ratio for Vanguard Convertible Securities Fund.
  • February 2015. Lower expense ratios for 6 international ETFs.
  • January 2015. Expense ratio changes for several actively managed funds.

Past Highlights

  • April 2016. Total US Stock, 500 Index, Total US Bond, and Small-Cap Value all lowered expense ratios in one or more share classes.
  • February 2016. Total International Stock, Total International Bond, FTSE All-World ex-US, and Global ex-US REIT funds all lowered their expense ratios.
  • January 2016. Target Retirement 2010-2060 Funds saw their expense ratio drop by 2-3 basis points to 0.14%-0.16%.
  • February 2014. Total US Stock ETF (VTI) was unchanged at 0.05%. Total International Stock ETF (VXUS) dropped to 0.14%. FTSE Emerging Markets ETF (VWO) dropped to 0.15%.
  • January 2013. Target Retirement 2010-2055 Funds saw their expense ratio drop by a basis point to 0.16%-0.18%.
  • May 2012. 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.
  • April 2012. 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.
  • February 2012. 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.

(Note that Vanguard chooses to delete their old announcements after about a year, so everything 2014 and before is now gone.)

In recent years as index funds have shot up in popularity, most of the major providers have introduced similar low-cost products (notably iShares, Fidelity, and Schwab). I think the competition is great and even Vanguard needs to be kept on its toes. However, with my own money, I think Vanguard has both the past history and better ongoing structure to keep costs low over the long haul. I have used both Fidelity Spartan funds and iShares ETFs as alternatives.

Comments

  1. I wonder if the recent decline could force an increase in expense ratios.

  2. Are you buying ETFs directly or through a robo-advisor?

    The robo-advisor approach typically charges a flat percentage, but there are no transaction fees for buying and selling. Still pay the fund fees of course.

    I am in the process of migrating from actively managed funds to ETFs.

  3. BlackRock and Schwab have the lowest fees for the stock market index ETFs. It is just 0.03%. Hopefully Vanguard will follow and lower their VTI fee from 0.05% to 0.03%. I know it doesn’t sound like a lot. But running the numbers show that it will make $11000 difference for me if I retire after 30 years of professional career. And running the numbers for 60 years show an astounding difference of $168,000. That’s not small change.

    • Could not agree with you more, Nick. More people should look at expense ratios of funds they hold.

    • Many funds have temp lowered there fees to compete with Vanguard only to raise them later on. Vanguard is the only true non profit

  4. From what I can fathom, any expense ratio below 0.10% really is not going to make a big difference unless your balance is massive…and if it is, who cares if you pay a few hundredths of a percentage fee more? I know I wouldn’t much care if I paid an annual expense ratio of $3k or $5k on a $10 million portfolio. Let the kids cry over their meager inheritance 🙁

    And for someone with a $100k portfolio, paying .03% or .05% is a difference of $20/year. That’s less than the cost of a pizza. Yes, I know…that may be several pizzas over my remaining investment time horizon.

  5. Not reported are the expense ratio increases: VGSIX — Investor shares REIT Index went up .26

  6. Minnesota Saver says:

    Four years ago I consolidated all my employer 401(K)s from having been laid off mutiple times working in high tech into Vanguard ETFs. Reductions in the ETF expense ratios help reinforce this was the right move for me. Not only is it simpler to manage one account, it is proving to be more cost effective.

    Nice boring progress.

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