The USA Leaders
04 February 2025
Malvern – The investing world just got a major shake-up. Vanguard Fee Cut is the buzzword on Wall Street as the firm slashes costs for nearly 100 mutual funds and ETFs, marking the largest reduction in its history. Starting February 1, 2025, investors will collectively save a staggering $350 million. For those who invest in Vanguard funds, this isn’t just a number; it’s a game-changer move.
Let’s see how the Vanguard fee cut impacts investors at scale.
The Scope of Vanguard Fee Cut
Vanguard’s latest move affects 168 share classes across 87 funds, covering both actively managed and index-based funds. From stock-heavy ETFs to bond-focused mutual funds, the reductions span every asset class. The average asset-weighted fee for Vanguard funds will now sit at 0.07%, a stark contrast to the industry average of 0.44%.
A look at key funds benefiting from this cut:
| Fund Name | Ticker | Prior Expense Ratio | New Expense Ratio |
| Total Bond Market Index Fund | VBTLX | 0.05% | 0.04% |
| Treasury Money Market Fund | VUSXX | 0.09% | 0.07% |
| FTSE Developed Markets ETF | VEA | 0.06% | 0.03% |
| Dividend Appreciation ETF | VIG | 0.06% | 0.05% |
| Total International Stock ETF | VXUS | 0.08% | 0.05% |
This move cements Vanguard’s reputation as a cost-cutting leader, reinforcing the firm’s mission of maximizing returns for investors rather than extracting fees.
Why Vanguard Cut Fees Now?
The Vanguard fee cut comes amid a highly competitive investment landscape. As more investors gravitate toward low-cost investing, Vanguard is doubling down on its founding principle: giving back to clients.
With ETF inflows surging past $305 billion in 2024, the firm is leveraging its scale to pass on cost savings, keeping its funds attractive to both retail and institutional investors.
Vanguard’s new CEO Salim Ramji stated, “Every basis point we cut in fees is money that stays in our clients’ pockets and compounds over time. Lower fees mean greater wealth accumulation, which aligns with our mission of serving investors first.”
How Will This Impact Vanguard’s Market Share?
This strategic fee cut is expected to expand Vanguard’s dominance in the asset management industry. A few key outcomes:
- Increased Investor Inflows: With fees lower than competitors, more investors are likely to shift their assets to Vanguard funds.
- Stronger Market Position: About 86% of Vanguard’s mutual fund and ETF assets now sit in the lowest-cost deciles among industry peers.
- Competitive Pressure: Rivals like BlackRock and Fidelity may be forced to follow suit, further intensifying the race to the bottom on fees.
What it Means for Retail Investors?
For everyday investors, the Vanguard fee cut means more money working for them. Over time, lower fees translate into higher compounding returns, helping individuals reach their financial goals faster.
Consider this: A 1% difference in fees on a $100,000 investment over 30 years can result in a nearly $100,000 gap in portfolio value. Vanguard’s move ensures that investors get to keep more of their hard-earned money.
The Big Picture: Vanguard’s Long-Term Strategy
This historic Vanguard fee cut is not just a one-off event. Vanguard has cut fees over 2,000 times since its founding, solidifying its position as the champion of low-cost investing. As the asset management industry evolves, Vanguard’s proactive approach ensures it remains a dominant force in the era of fee-conscious investing.
For investors, the message is clear: Vanguard is betting on long-term relationships rather than short-term profits. And in 2025, that bet is paying off in a big way.
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