Vanguard Cuts Fees Again, Pushing Industry-Wide Average to Historic 0.06%

VALLEY FORGE, Pa. — Vanguard Group, the indexing behemoth, is turning the screws on the asset management industry once more. The firm announced Monday a sweeping reduction in fees across dozens of its mutual funds and exchange-traded funds (ETFs), a move that cements its position as the low-cost leader and challenges rivals to keep pace.

The latest cuts apply to 84 share classes spanning 53 funds. This strategic trimming lowers Vanguard's average asset-weighted expense ratio to a mere 0.06%, edging down from the previous record set just last year. For a firm overseeing roughly $12 trillion in assets, such incremental declines translate into massive savings for its client-owners.

This is not a new tactic but a reaffirmation of a core philosophy. For five decades, since Jack Bogle launched the first index fund for individual investors, Vanguard has used its scale and unique ownership structure to relentlessly drive down costs, forcing the entire industry into a race to the bottom. While some competitors have recently signaled a pause—with average fees on new funds inching up—Vanguard remains committed to its blueprint of perpetual cost reduction.

"Our structure is our advantage," said Vanguard CEO Salim Ramji in the announcement. "We have no outside shareholders to profit. Every dollar we save is a dollar that stays in our clients' portfolios. These reductions, exceeding half a billion dollars since last year, are a direct fulfillment of our commitment to those who own Vanguard."

The firm estimates the combined fee cuts from 2025 and 2026 will save investors approximately $600 million. This is possible because Vanguard is owned by its funds, which are in turn owned by its investors. Excess revenue is systematically funneled back into lowering expenses, a model that insulates it from the margin pressures felt by publicly-traded competitors.

The financial impact of this model is stark. Despite holding the second-largest pile of U.S. ETF assets, Vanguard's fee revenue remains a fraction of its peers'. Bloomberg Intelligence data shows the firm generated about $1.5 billion in fee revenue from its U.S. ETFs last year, far behind BlackRock's $5.4 billion haul, even though BlackRock's ETF assets are only marginally larger.

Notably, Vanguard's average fees continue to drift downward even as it expands into higher-fee territory, such as actively managed strategies. Last year, it launched its first traditional active stock-picking ETFs, including the Vanguard Wellington Dividend Growth Active ETF (VDIG), which carries a 0.40% expense ratio—its most costly offering but still competitive within the active arena.

The move underscores a shifting landscape where scale, not just performance, is the ultimate competitive weapon. Vanguard's latest cuts ensure the high-pressure environment for asset managers is here to stay, compelling them to justify every basis point charged to investors.

Investor Reactions

Michael Chen, Retirement Planner in San Diego: "For long-term investors, especially those saving for retirement, this is unequivocally good news. Vanguard's cuts compound over decades, meaning more money stays invested and working for the client. It validates the 'set-it-and-forget-it' indexing strategy."

Sarah Fitzpatrick, Financial Advisor in Chicago: "While the headline number is impressive, we must remember cost is just one factor. For some clients, specific investment objectives or the need for tailored advice may justify other options. That said, Vanguard's move raises the bar for the entire industry on transparency and value."

David R. Miller, Former Hedge Fund Manager & Commentator: "It's a brilliant marketing gimmick wrapped in a populist narrative. They're shaving microscopic amounts off fees they already admit are barely profitable, while their sheer asset volume guarantees massive absolute revenue. Don't be fooled—this isn't charity. It's a calculated move to crush smaller competitors and maintain a monopoly on passive flows. The 'client-owned' rhetoric is a smokescreen for aggressive market dominance."

Priya Sharma, University Endowment Analyst: "The data point comparing Vanguard's fee revenue to BlackRock's is the real story here. It quantifies the immense pricing power Vanguard has surrendered to benefit its investors. This structural advantage is nearly impossible for traditional, profit-maximizing firms to replicate, which may lead to further industry consolidation."