Vanguard announced on Monday that it has reduced management fees for 87 exchange-traded funds and mutual funds. This move is the largest fee cut in the company’s nearly 50-year history. The firm estimates that this decision will save investors $350 million in 2025 alone.
The average fee for Vanguard’s actively managed fixed income funds and ETFs is now 0.10%, compared to the industry average of 0.53%. Vanguard’s bond index funds now have a weighted-average expense ratio of 0.05%. This is significantly lower than the competitor average of 0.11%.
CEO Salim Ramji commented on the fee cuts, stating, “We’re proud to build on Vanguard’s legacy of lowering the costs of investing—which we have done more than 2,000 times since our founding—by announcing our largest ever set of expense ratio reductions. Lower costs enable investors to keep more of their returns, and those savings compound over time.”
This decision aligns with Vanguard’s long-standing commitment to making investing more affordable and accessible for everyone. The company has specifically reduced management fees for 168 share classes of 87 funds.
The list of cuts includes actively managed and index-based products, with many of the funds representing billions of dollars. Stocks, bonds, and commodities products are all included in the reductions.
Vanguard announces largest ever fee cuts
Some notable fee reductions include:
– Fund fees down to 0.07% from 0.08%, representing $9.9 billion in share class net assets. – Fund fees down to 0.17% from 0.22%, representing $7.7 billion in share class net assets. – Fund fees down to 0.15% from 0.20%, representing $4.9 billion in share class net assets.
– Fund fees down to 0.35% from 0.40%, representing $3.8 billion in share class net assets. The fee cuts to VEGBX and some other actively managed bond funds are notable because active fixed income is emerging as a growth area for the exchange-traded fund industry. The booming popularity of ETFs, which can be purchased more easily than many mutual funds, is often cited as a key factor in driving down management fees for stock funds in recent decades.
Vanguard has long been a leader in lowering fees among asset managers, a tradition dating back to its founder, Jack Bogle. Monday’s announcement is a sign that the trend could continue under Ramji, who took over as CEO in 2024 and previously worked at rival BlackRock. The fee cuts come less than a month after Vanguard agreed to pay to settle charges from the Securities and Exchange Commission related to disclosures around some of its retirement products.
Founded by Jack Bogle in 1975, the company has about $10.4 trillion in assets under management as of Nov. 30, 2024.