In early February, investment services firm The Vanguard Group announced its largest fee cut ever, slashing costs on 168 share classes across 87 funds. The move went into effect on February 1 and is expected to save investors more than $350 million in 2025, according to Vanguard.
"This fee cut speaks to what our founder, Jack Bogle, set out to do, which was to create an investment company that was designed for one constituency, and that's our investors," said Vanguard CEO Salim Ramji in a statement. "Bogle had a great phrase: 'You get what you don't pay for.'"
Ramji added that "there's a false dichotomy between, Do you want great performance or high quality, or do you want low costs? At Vanguard, you can get both."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Following the fee reduction, Vanguard proudly noted that 86% of its mutual fund and exchange-traded fund (ETF) assets have the lowest-cost declines in their peer groups. The average expense ratio for Vanguard's index fixed-income ETFs is now just 0.037% and its actively managed fixed-income ETFs have an average expense ratio of 0.105%.
How Vanguard's lower fees benefit investors
As Kiplinger contributor and Head of Investment & Trading Services at Vanguard, James Martielli, CFA, explains in his piece "A Frugal Saver's Guide to Spotting Investment Costs," expenses are often one of "the best predictors of future returns of funds with a similar investment strategy."
Specifically, he says that "the higher the average expense ratio, the lower the average return." Let's say you have $1,000 to invest in a fund that charges an expense ratio of 0.20% or another that charges 0.05% to invest. Your return from the fund that costs 0.05% will accrue a bigger return over time than the one that charges 0.20% because you're left with more money to invest.
"Like interest, costs compound and can really add up over time," Martielli writes.
If you're in the market for a low-cost fund or just want to know what your options are, here are the Kiplinger ETF 20, our favorite cheap ETFs to buy. We also have the Kiplinger 25, the best no-load mutual funds, several of which are top Vanguard funds.
Related Content
-
Dow Dives 797 Points as Government Opens: Stock Market TodayThe process of pricing and re-pricing realities old and new never stops, and next week promises to be at least as exciting as this week.
-
3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025Tax Deductions New charitable giving tax rules will soon lower your deduction for donations to charity — here’s what you should do now.
-
Dow Dives 797 Points as Government Opens: Stock Market Today
The process of pricing and re-pricing realities old and new never stops, and next week promises to be at least as exciting as this week.
-
5 Core Stocks Every Investor Should Own In 2026 and BeyondCore stocks are solid, long-term investments that provide stable returns and steady growth within your portfolio. Here are five we like.
-
How to Calm Your Retirement Nerves When It's Time to Shift from Savings Mode to Spending ModeTransitioning from saving to spending in retirement can be tricky, but devising a strategic plan can help ensure a smooth and worry-free retirement.
-
Why Wills and Trusts Aren't Enough in the Great Wealth Transfer, From an Attorney Who KnowsFamilies need to prepare heirs through communication and financial know-how, or all that money could end up causing confusion, conflict and costly mistakes.
-
Private Markets for Main Street: What Financial Advisers' Clients Need to KnowWith product innovation 'democratizing' private market access for everyday investors, advisers must step up their game to educate clients on the pros and cons.
-
Dow Climbs 327 Points, Crosses 48,000: Stock Market TodayMarkets are pricing the end of the longest government shutdown in history – and another solid set of quarterly earnings.
-
The Best Homebuilder ETFs to BuyThe best homebuilder ETFs give investors efficient exposure to growth-oriented real estate assets.
-
Seven Practical Steps to Kick Off Your 2026 Financial PlanningIt's time to stop chasing net worth and start chasing real worth. Here's how to craft a plan that supports your well-being today and in the future.
