Announcing the largest fee cut in Vanguard history
February 03, 2025
Once again, Vanguard is lowering the cost of investing. Effective February 1, 2025, the firm reduced fees on 168 share classes across 87 funds. The fee reductions are expected to save investors more than $350 million this year alone.
"The Jack Bogle-founded investing giant is lowering expense ratios for 168 share classes across 87 mutual funds and exchange-traded funds effective immediately, it said in a press release on Monday. The cuts mean Vanguard’s average asset-weighted fee is now just 0.07% for its $10 trillion under management, compared with 0.44% for the rest of the industry."
I have to say my jaw dropped when I saw this, especially for things like the money market funds, longstanding state muni bond funds, S&P/Russell index ETFs, and international.
Great for people who use Vanguard funds/ETFs. A surprise, and I'd go further and say it is redemption for Tim Buckley unless there is some decision made recently that Tim didn't want to do. We know what the downside is for people who use Vanguard brokerage for customer service.
Great news! Now I really hope that the Vanguard Group Europe follows suit!
The unsophisticated investor who is realistic about his shortcomings is likely to obtain better results than the knowledgeable professional who is blind to even a single weakness.” Warren Buffett
up-and-to-the-right wrote: Mon Feb 03, 2025 9:42 am
No VOO or VFIAX unfortunately.
VFIAX is already 4/100 of 1 percent.
Last edited by Dottie57 on Mon Feb 03, 2025 10:40 am, edited 1 time in total.
Life is more than grinding it out in some drab office setting for an arbitrary number. This isn't a videogame where the higher score is better. -Nathan Drake
Love the trend, although it's been going on for decades. A few basis points every few years really adds up after a while. Now investing is basically free.
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4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
I was hoping Vanguard might cut the ER of VOO (Vanguard S&P 500 ETF) from 0.03% to 0.02% in order to match SSgA's SPLG equivalent; but, alas, no such luck. Maybe it'll happen in the next round of cuts.
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[This thread has been merged into this on-going discussion. Moderator Pops1860]
Heard this news on Bloomberg Radio this morning.
"Effective February 1, 2025, the firm reduced fees on 168 share classes across 87 funds. The fee reductions are expected to save investors more than $350 million this year alone."
Examples from a few popular funds:
VBTLX -- prior expense ratio 0.05% / new expense ratio 0.04%
VXUS -- 0.08% / 0.05%
VUSXX -- 0.09% / 0.07%
VIG -- 0.06% / 0.05%
Last edited by Pops1860 on Mon Feb 03, 2025 11:33 am, edited 1 time in total.
Reason:Merged into on-going discussion.
A little disappointed that VOO did not match SPLG (exp ratio 0.02%) or the that mutual funds equivalents are more expensive than the VOO or VTI etfs. It is a small difference but the VTI equivalent at Fidelity is 0.015% for example.
Still, one thing that keeps me at Vanguard is the money market funds are a lot cheaper and perform a lot better than Fidelity + it does not feel Vanguard pushes me to get a margin account. It is good that the treasury fund got a cut.
One important thing Vanguard needs to match is TOTP standard security 2fa authentication that Fidelity has had since the middle of 2024.
If these fees get any lower, they’ll be paying us for the privilege of holding our funds.
At this point, I wish they would just improve the website. continue to improve the website.
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How do you know if a boglehead doesn’t care about calculating dividend yield? |
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cupcakeswsprinkles wrote: Mon Feb 03, 2025 11:10 am
One important thing Vanguard needs to match is TOTP standard security 2fa authentication that Fidelity has had since the middle of 2024.
Absolutely, could not agree more. How hard would it be for them to simply mimic the way Schwab does it, where if they don't recognize your login they send a push notification to the Schwab app on your phone? Easy peasey, very secure, works everywhere. I can't imagine it would take a small team of developers (literally, maybe 2-3) more than a few weeks to implement such a straightforward security feature. What exactly is the Vanguard dev team working on so hard that they can't do simple, extremely useful stuff like this??
Nyarlathotep wrote: Mon Feb 03, 2025 11:27 am
Absolutely, could not agree more. How hard would it be for them to simply mimic the way Schwab does it, where if they don't recognize your login they send a push notification to the Schwab app on your phone? Easy peasey, very secure, works everywhere. I can't imagine it would take a small team of developers (literally, maybe 2-3) more than a few weeks to implement such a straightforward security feature. What exactly is the Vanguard dev team working on so hard that they can't do simple, extremely useful stuff like this??
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My guess is they keep their dev team low to keep expenses low and being a firm from the 70s they likely have a lot of technical debt. Also, management is likely pushing mobile because they worry younger investors won't use mobile. All the changes they have been doing is to cut their costs.
VTWAX isn't mentioned anywhere at that link. I checked the Vanguard site VTWAX page though and it does look like ER has indeed dropped from 0.10% to 0.09%. VT has also dropped from 0.07% to 0.06%.
VTWAX isn't mentioned anywhere at that link. I checked the Vanguard site VTWAX page though and it does look like ER has indeed dropped from 0.10% to 0.09%. VT has also dropped from 0.07% to 0.06%.
I see both of these at the link. At the bottom the long table you need to click "show more" a couple of times to see them.
Nyarlathotep wrote: Mon Feb 03, 2025 11:27 am
they send a push notification to the Schwab app on your phone? Easy peasey, very secure, works everywhere. I can't imagine it would take a small team of developers (literally, maybe 2-3) more than a few weeks to implement such a straightforward security feature.
They do send a push notification to the mobile app now after entering username/password (as of a few weeks ago), but it is a yes/no not at TOTP code. Even on this forum we have many members who prefer not to use the Vanguard app on their mobile phone, but maybe this feature will convince a few more to do it.
Last edited by stan1 on Mon Feb 03, 2025 1:40 pm, edited 1 time in total.
up-and-to-the-right wrote: Mon Feb 03, 2025 9:42 am
No VOO or VFIAX unfortunately.
VOO and VTI are already well priced in my opinion. I was hoping to see VNQ on the list however.
That said, as someone who puts 20% in international and keeps emergency funds in VUSXX, this cut is quite substantial for me.
(AGE minus 23%) Bonds | 5% REITs | Balance 80% US (75/25 TSM/SCV) + 20% International (80/20 Developed/Emerging)
up-and-to-the-right wrote: Mon Feb 03, 2025 9:42 am
No VOO or VFIAX unfortunately.
VOO and VTI are already well priced in my opinion. I was hoping to see VNQ on the list however.
That said, as someone who puts 20% in international and keeps emergency funds in VUSXX, this cut is quite substantial for me.
I keep my emergency fund in the VMFXX settlement fund but I live in a high tax state so I’m planning to switch to VUSXX. Am I correct that VUSXX can’t be selected as your settlement account at VG so you need to purchase it separately? And if you ever want to withdraw it, do you have to sell it from VUSXX, wait for it to settle into the VMFXX settlement fund, and then withdraw to your bank?
VOO and VTI are already well priced in my opinion. I was hoping to see VNQ on the list however.
That said, as someone who puts 20% in international and keeps emergency funds in VUSXX, this cut is quite substantial for me.
I keep my emergency fund in the VMFXX settlement fund but I live in a high tax state so I’m planning to switch to VUSXX. Am I correct that VUSXX can’t be selected as your settlement account at VG so you need to purchase it separately? And if you ever want to withdraw it, do you have to sell it from VUSXX, wait for it to settle into the VMFXX settlement fund, and then withdraw to your bank?
Yes, you have to manually purchase and sell it, unfortunately. Fidelity handled money market funds way better where you can use them to purchase etfs or withdraw without needing to first convert to sweep account.
That said, you can sell and withdraw on the same day if you do it during trading hours; so its not terribly bad. You do not need to wait the extra day between selling and withdrawing.
(AGE minus 23%) Bonds | 5% REITs | Balance 80% US (75/25 TSM/SCV) + 20% International (80/20 Developed/Emerging)
Lower costs are always welcome. The lower ratios are really more about marketing to bring in new assets. The weighted average expense ratio of my portfolio went from 0.09% to... 0.09%.
I don't mean to be negative, but I would have greatly preferred that they kept the costs the same and invested more in IT, security, and customer service. They're buying neon signs, while the old plumbing is backing up.
foosball wrote: Mon Feb 03, 2025 2:23 pm
Lower costs are always welcome. The lower ratios are really more about marketing to bring in new assets. The weighted average expense ratio of my portfolio went from 0.09% to... 0.09%.
I don't mean to be negative, but I would have greatly preferred that they kept the costs the same and invested more in IT, security, and customer service. They're buying neon signs, while the old plumbing is backing up.
Or do what I do - use Fidelity to buy Vanguard ETFs so you have better app, better IT and better customer service. Use Vanguard for the emergency funds (VUSXX) and 529 plan. You get best of both worlds. In recent years, Vanguard seems more interested in managing accounts for a fee rather than buy-and-hold passive accounts anyway; so this may even be their intention for all we know.
(AGE minus 23%) Bonds | 5% REITs | Balance 80% US (75/25 TSM/SCV) + 20% International (80/20 Developed/Emerging)