Vanguard Slashes Fees Again: Investors to Save Nearly $600 Million as Fund Giant Flexes Scale
Vanguard Group, the $12 trillion asset management behemoth, is turning fee reductions into an annual ritual. The firm announced a new round of expense ratio cuts across 84 share classes of 53 index funds, a move projected to save investors nearly $250 million in 2026. This follows a similar reduction last year that saved clients an estimated $350 million, bringing the total savings over two years to nearly $600 million.
The cuts, effective February 1, apply to a broad range of U.S. and international stock and bond index funds, including large-, mid-, and small-cap growth and blended strategy offerings. The reductions vary from 0.01% to 0.1%. Following these adjustments, which now affect 60% of Vanguard's product lineup, the company's asset-weighted average expense ratio has edged down to 0.06% from 0.07% last September.
"These actions are a direct reflection of our client-owner structure and our enduring commitment to giving investors a fair shake," said CEO Salim Ramji, who took the helm in 2024. "Every basis point saved compounds over time, directly supporting our clients' long-term financial objectives."
The announcement underscores the relentless fee compression in the asset management industry, driven by competition, scale, and the rise of passive investing. Since 2000, average expense ratios for stock and bond mutual funds and ETFs have fallen by more than half. Vanguard, founded by John Bogle in 1975, has been at the forefront of this trend, using its massive scale to lower costs continuously. With over $12 trillion spread across 458 funds, Vanguard's pricing power remains a formidable advantage in a market increasingly viewed as a commodity.
INVESTOR REACTIONS:
"Finally, some tangible benefits trickling down. As a long-term index investor, these savings, however small they seem yearly, make a real difference in my retirement math over decades." — Michael Chen, Financial Planner, Boston
"It's a smart, defensive play. With flows tightening, Vanguard is locking in loyalty. But let's be clear: this is about retaining assets and stifling smaller competitors who can't compete on price, not pure altruism." — David Park, Portfolio Manager, Chicago
"A 0.01% cut? That's a rounding error, not a revolution. They're patting themselves on the back for microscopic adjustments while sitting on trillions. This is PR, not genuine client advocacy. The entire industry's fee structure remains bloated." — Sarah Gibson, Investor Advocate & Blogger
"This solidifies the 'Vanguard Effect'—their moves force the entire industry's hand. Fidelity, BlackRock, and others will likely respond, which is a net win for every investor's bottom line." — Robert Flynn, Economics Professor, Stanford
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