6 Index Funds That Are Cheaper than Vanguard

Vanguard, long considered the king of low-cost indexing, has lost its throne—for the time being.

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Vanguard, long considered the king of low-cost indexing, has lost its throne—for the time being. In what must be a vexing twist for the Malvern, Pa., fund firm, which has long trumpeted the importance of low fees, the crown for the lowest-cost index funds now belongs to Schwab.

But let’s keep things in perspective. In some cases, the Schwab index mutual funds and exchange-traded funds we’re talking about undercut their Vanguard counterparts by just 0.01 percentage point. In dollar terms, says John Woerth, a Vanguard spokesman, that amounts to $1 in savings on a $10,000 investment. In other words, not a whole lot. It boils down to “the diminishing value of de minimis differences in expense ratios,” he says. By assets, Vanguard, with $4 trillion under management, still rules. (Schwab has $2.5 trillion in assets under management.)

Schwab’s index mutual funds have another advantage: no investment minimum. The firm did away with the investment minimum requirement for many of its index mutual funds in March. The entry-level Investor share class of Vanguard funds, by contrast, requires an initial outlay of $3,000; the lower-cost Admiral share class at Vanguard calls for $10,000.

Here is a closer look at half a dozen Schwab funds and ETFs in five different categories. Each fund is less expensive than the comparable Vanguard offering, regardless of mutual fund share class.

Prices and data are through July 13. Click on ticker-symbol links in each slide for current prices and more.

All data for Vanguard funds refer to the Investor share class.

Nellie S. Huang
Senior Associate Editor, Kiplinger's Personal Finance

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.