Vanguard Takes ETF Fee War A Step Forward

Vanguard has been hitting headlines this year with back-to-back fee cut news. In late February, it slashed fees on 10 of its exchange-traded funds. Eight of the 10 Vanguard ETFs that underwent fee cuts then were international-focused, and fee reductions ranged from one to two basis points (read: Vanguard Intensifies ETF Fee War Again).

In late April, Vanguard cut expenses on 21 of its already ultra-low-cost funds, including eight of its 10 largest ETFs. The list includes some of the high-profile funds of Vanguard, namely, Vanguard Total Stock Market ETF (AX:VTI) and Vanguard S&P 500 ETF VOO, the third and fourth largest funds, respectively, per an article published on etf.com. VTI and VOO now cost 0.03% each, down from 0.04%.

These Vanguard funds will now join the group formed by Schwab U.S. Broad Market ETF (KL:SCHB) , Schwab U.S. Large-Cap ETF SCHX, iShares Core S&P Total U.S. Stock Market ETF ITOT, SPDR Portfolio Large Cap ETF SPLG and SPDR Portfolio Total Stock Market ETF SPTM, all of which charge 0.3% a piece.

These apart, Vanguard announced lower fees on eight domestic ETFs. The ETFs that underwent a fee cut to 0.04% from 0.05% include Vanguard Growth ETF (BE:VUG) , Vanguard Value ETF (HN:VTV) , Vanguard Large-Cap ETF VV and Vanguard Mid-Cap ETF (V:VO) . Vanguard Extended Market ETF VXF saw its annual fee being lowered to 0.07% from 0.08% while the Vanguard High Dividend Yield ETF VYM is charging 0.06%, down from 0.08%.

Fee Cut: A Solid Trend

Social Finance Inc., an online lender also known as SoFi, recently hit headlines by launching two ETFs that waived off managed fees for at least the first year of operation (read: Zero-Fee ETFs to Hit the Market Finally?).

Then J.P. Morgan launched the JPMorgan (NYSE:JPM) BetaBuilders U.S. Equity ETF (BBUS), which offers exposure to large-and-mid cap U.S. equities, with a fee of 0.02%. J.P. Morgan intends to make the broad U.S. stock market fund cheaper than that of Vanguard, Schwab and BlackRock’s iShares.

Then came a negative-fee ETF — Salt Financial’s Salt Low truBeta US Market Fund LSLT — which plans to pay 0.05% of assets to people for their investment in it till April 2020 or till the fund crosses the $100 million level, whichever comes earlier. After that threshold, the fund will charge 29 bps in fees (read: Global ETF Fee War Heightens With Negative Fee ETF Filed).

Against this backdrop, it is expected that Vanguard will leave no stone unturned to garner market share. Below we highlight the Vanguard funds that underwent a fee cut in the latest round.

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