Vanguard Ends 2012 with a Bang, Cuts Fees on 22 ETFs - ETF News And Commentary
December 28 2012 - 3:15AM
Zacks
Vanguard has long been the king of low cost products. Its
structure, which has the ETFs be a separate share class of Vanguard
Index funds,—along with its client ownership system—has allowed the
firm to charge some of the cheapest expense ratios in the entire
industry.
While Vanguard has long dominated this corner of the market, we
have recently seen an upstart come in and rival or even beat out
Vanguard on fees, Charles Schwab. The massive broker has made a
name for itself by slashing fees to rock bottom levels on a number
of its top products, putting it into direct competition with
Vanguard in a number of key segments.
Vanguard cannot have been happy about this development and has
moved to reduce fees on many of its funds in the recent past as
well. In fact, the firm just announced a new plan to slash fees on
almost two dozen ETFs, marking an interesting end to the ETF fee
war of 2012 (see Four Vanguard ETFs for Long Term Investors).
Below, we highlight this group of ETFs which goes into
sector, broad market, and various corners of the bond world in this
latest development to have the lowest cost lineup in the ETF
world.
In terms of equity products the list includes:
ETF
|
Symbol
|
Old Expense Ratio
|
New Expense Ratio
|
Consumer Discretionary
|
VCR
|
0.19%
|
0.14%
|
Consumer Staples
|
VDC
|
0.19%
|
0.14%
|
Energy
|
VDE
|
0.19%
|
0.14%
|
Financials
|
VFH
|
0.23%
|
0.19%
|
Health Care
|
VHT
|
0.19%
|
0.14%
|
Industrials
|
VIS
|
0.19%
|
0.14%
|
Info Technology
|
VGT
|
0.19%
|
0.14%
|
Materials
|
VAW
|
0.19%
|
0.14%
|
Russell 1000 Value
|
VONV
|
0.16%
|
0.15%
|
Russell 2000
|
VTWO
|
0.22%
|
0.21%
|
Russell 2000 Value
|
VTWV
|
0.33%
|
0.32%
|
Russell 3000
|
VTHR
|
0.16%
|
0.15%
|
Telecoms
|
VOX
|
0.19%
|
0.14%
|
Utilities
|
VPU
|
0.19%
|
0.14%
|
As you can see the cuts aren’t too much in a number of products,
and especially so in the Russell based ETFs. However, for the rest,
while the total basis point reduction might not be much, it does
represent a significant cut on a percentage basis (also see Five
Cheaper ETFs You Probably Overlooked).
Meanwhile, bonds also saw some cuts as well including the
following ETFs:
ETF
|
Symbol
|
Old Expense Ratio
|
New Expense Ratio
|
Int. Term Corp Bond
|
VCIT
|
0.14%
|
0.12%
|
Int. Term Govt Bond
|
VGIT
|
0.14%
|
0.12%
|
Long Term Corp Bond
|
VCLT
|
0.14%
|
0.12%
|
Long Term Govt Bond
|
VGLT
|
0.14%
|
0.12%
|
Mortgage Backed
|
VMBS
|
0.15%
|
0.12%
|
Extended Treasury
|
EDV
|
0.13%
|
0.12%
|
Short Term Corp Bond
|
VCSH
|
0.14%
|
0.12%
|
Short Term Govt Bond
|
VGSH
|
0.14%
|
0.12%
|
Obviously the cuts here were by and large less than what
investors saw in the equity world from Vanguard. However, expenses
were already lower to begin with, so there was less to cut anyway
(also see Vanguard Joins TIPS ETF Fight with VTIP).
Bottom Line
Even with some big cuts to the fees for some of its most popular
ETFs, Vanguard hasn’t been able to keep the title of cheapest ETF
provider in a few important categories that target the broader
market. It has, thanks to this latest cut, been able to reclaim the
mantle in the all-important sector space though, so if the investor
trend into low cost products continues, this most recent move could
keep Vanguard ahead of the pack (see Five Great Global ETFs for
Complete Equity Exposure).
Low cost options have certainly helped Vanguard, as the firm is
now closing in on State Street for second place in terms of total
ETF AUM. At last check, the company has $242 billion in ETF assets,
just a few billion shy of State Street’s total, suggesting that if
this recent cut can spur inflows, we could see Vanguard in second
place behind iShares at some point in 2013.
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VIPERS-MATERIAL (VAW): ETF Research Reports
VIPERS-CONS DIS (VCR): ETF Research Reports
VIPERS-CONS STA (VDC): ETF Research Reports
VIPERS-ENERGY (VDE): ETF Research Reports
VIPERS-FINANCL (VFH): ETF Research Reports
VIPERS-INFO TEC (VGT): ETF Research Reports
VIPERS-HLTH CR (VHT): ETF Research Reports
VIPERS-INDUS (VIS): ETF Research Reports
VANGD-RUS 1000V (VONV): ETF Research Reports
VANGD-RUS 3000 (VTHR): ETF Research Reports
VANGD-RUS 2000 (VTWO): ETF Research Reports
VANGD-RUS 2000V (VTWV): ETF Research Reports
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