- Vanguard's fee cuts will save investors $250 million annually
- Fee reductions range from 0.01% to 0.10% on already-low fees
PROVIDENCE, Rhode Island, Feb 2 (Reuters) - Vanguard, the world's second-largest asset manager and a pioneer of low-cost funds, said on Monday it is cutting fees on 53 of its index-based mutual funds and exchange-traded funds, marking its second sweeping fee reduction in the past 12 months.
The move underscores how even Vanguard is facing increasing competitive pressure to cut costs and live up to its brand as a low-cost provider, a key factor behind its $10 trillion in assets, analysts say.
"Low fees have been a powerful marketing and behavioral hook," said Jeff DeMaso, editor at the Independent Vanguard Adviser, who scrutinizes Vanguard and its investment products.
The cuts amount to reductions of a few basis points, from 0.01% to 0.10%, on already-low fees. For instance, Vanguard's Large Cap ETF will see the fee drop to 0.03% from 0.04%, while the cost of owning the International High Dividend Yield ETF will fall 10 basis points, from 0.17% to 0.07%.
In total, the fee cuts will save investors $250 million a year, according to Daniel Reyes, global head of investment product at Pennsylvania-based Vanguard. A year ago, Vanguard announced what it described as its most extensive cuts yet, slashing fees on 87 of its funds with $350 million in savings.
"The cuts...tend to be small relative to the total fee, but it does send a signal that the firm continues to work on ways to lower costs," said Zachary Evans, an analyst who tracks fee trends in the asset management industry at Morningstar.
According to Morningstar, the average ETF fee hovered at around 0.53% in 2025, which includes more costly actively managed products. The average mutual fund levied a fee of 0.99%.
Cerulli Associates, which provides consulting services to the asset management industry, calculates that 75% of Vanguard's mutual funds and 85% of its ETFs are priced in the lowest-cost decile for their categories, while the average Vanguard fund levies a fee that is 84% below the average of its competitors.
Still, DeMaso said there can be downsides to cost-cutting.
"If you're going to be the low-cost leader, it has to come from somewhere," he said. "At Vanguard, for better or worse, that's often meant its service and technology have fallen short."
Vanguard's Reyes said the company is addressing those issues, and is on track to boost its spending in this area by as much as 55% this year over 2025.
Suzanne McGee in Providence, Rhode Island; editing by Michelle Price and Diane Craft
Source: Reuters