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Vanguard on February 2 announced lower management fees for 53 investment funds, continuing an industry trend of lowering the cost of managing mutual funds and ETFs.
The investment firm says the lower fees will save investors nearly $250 million in 2026.
Vanguard has reduced fees over the past two years, saving investors approximately $600 million, the company said. Vanguard funds’ average “expense ratio” currently stands at 0.06%, or 6 cents on every $100.
A year ago, Vanguard said it was cutting management fees for 87 investment funds, the largest reduction in its history.
Vanguard is the second-largest asset manager after BlackRock, according to the Sovereign Wealth Fund Institute. Vanguard has $12 trillion in assets under management.
What is expense ratio?
In the investment industry, expense ratio is the annual cost of owning a mutual fund or exchange-traded fund. Basically, it is a management fee paid by the investor to the management company.
Fees are expressed as a percentage of the investment amount. Fees tend to be higher for actively managed funds and lower for “passive” funds that track the performance of a market index.
Bankrate said in a June 2025 report that fees over 1% are “high and should be avoided.”
Expense ratios are coming down. Average fees for equity mutual funds have fallen from 0.99% in 2000 to 0.4% in 2024 on an asset-weighted basis, according to Bankrate, a calculation that favors large funds.
Currently, many passive funds have expense ratios below 0.1%, or 10 cents per $100.
A March 2025 report from the nonprofit Investment Company Institute said the gradual decline in expense ratios reflects a shift to no-load funds, which typically do not charge commissions or commissions when buying and selling stocks.
According to the institute, between 1996 and 2024, expense ratios for equity mutual funds fell by 62%. Bond fund expense ratios fell by 55%.
Which Vanguard funds have low fees?
Here are some examples of new Vanguard fund fee reductions.
- For the Vanguard Total Stock Market Index Fund, the expense ratio fell from 0.14% to 0.06%.
- For the Vanguard Total International Bond Index Fund, the expense ratio fell from 0.06% to 0.03%.
- For the Vanguard International High Dividend Yield ETF, the expense ratio fell from 0.17% to 0.07%.
Vanguard is owned by funds managed by the company and is structured to return value to investors, company officials said.
“Vanguard is investor-owned. We have no external shareholders or internal owners who profit from our customers,” Vanguard CEO Salim Ramzi said in a release. “These fee savings of more than $500 million over the past two years clearly express our purpose and commitment to our clients as owners.”
