Vanguard Cuts Mutual Fund and ETF Fees

If you are using Vanguard mutual funds or ETFs to build your investment portfolio, may it be a retirement account or regular brokerage account, you are going to like this piece of news.

Vanguard announced on December 28th that starting December of 2012, the company changed expense ratios (ERs) of a number of funds (so it has already been in effective). In total, 37 mutual funds and 26 exchange-traded funds (ETFs) were affected by the latest adjustments and most of them have their costs reduced between 0.01% and 0.05%, but not all of them. The exceptions are 2 ETFs and 7 mutual funds:

  • S&P Small-Cap 600 (VIOO): ER from 0.16% to 0.17%
  • S&P Small-Cap 600 Value (VIOV): ER from 0.22% to 0.24%
  • Explorer Value Investor (VEVFX): ER from 0.61% to 0.63%
  • International Growth Investor (VWIGX): ER from 0.47% to 0.49%
  • International Growth Admiral (VWILX): ER from 0.34% to 0.36%
  • S&P Smal-lCap 600 Index Institutional (VSMSX): ER from 0.09% to 0.10%
  • S&P Small-Cap 600 Value Index Institutional (VSMVX): ER from 0.10% to 0.12%
  • U.S. Growth Investor (VWUSX): ER from 0.44% to 0.45%
  • U.S. Growth Admiral (VWUAX): ER from 0.30% to 0.31%

You can find the complete list of ETFs and mutual funds with their new ERs on Vanguard website.

What I noticed from the announced fee cut is that most funds in the list are actually sector funds and none of the Vanguard funds, ETFs or mutual funds, I am using in our retirement accounts was included, so the changes didn’t really affect us. The funds we currently hold in a number of IRA accounts are:

  • MSCI Emerging Markets ETF (VWO): ER 0.20%
  • Small-Cap Value ETF (VBR): ER 0.21%
  • Total Stock Market ETF (VTI): ER 0.06%
  • REIT ETF (VNQ): ER 0.10%
  • Wellington (VWELX): ER 0.27%
  • Total Stock Market Admiral (VTSAX): ER 0.06%
  • Total International Stock Index Admiral (VTIAX): ER 0.18%
  • 500 Index Fund Admiral (VFIAX): ER 0.05%
  • Emerging Markets Stock Index Admiral (VEMAX): ER 0.20%
  • Inflation-Protected Security Investor (VIPSX): ER 0.20%
  • Small-Cap Value Index Investor (VISVX): ER 0.35%
  • Intermediate-Term Bond Index Investor (VBIIX): ER 0.22%
  • Total Bond Market Index Investor (VBMFX): ER 0.22%

For our investments, we have gradually shifted to Admiral shares to further reduce costs after such an option became available a few years ago, except those that either are not yet eligible or have no Admiral shares available. The current threshold for converting from Investor shares to Admiral shares is $10,000. If you have Vanguard funds with more than $10,000 in market value, but haven’t converted them into Admiral shares yet, it may be a good idea to do the conversion now to save your overall investment costs over the long term.


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