Vanguard reignites ETF price war with swathe of fee cuts

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ETF investing platform Vanguard has fired a salvo in an ongoing ETF price war between asset management giants with its move to cut fees on 87 of its products.

The Financial Times reported that Vanguard’s latest round of fee cuts will apply to US and overseas index trackers, as well as its actively managed stock and bond funds.

The cuts affect 168 ETF share classes, the publication stated, a third of which are passive index trackers, while the remainder are actively-managed.

Nearly 40% of the cuts impact bond funds, according to the report. Around a quarter of Vanguard’s assets are held in such products.

After the cuts Vanguard’s actively managed bonds funds will see their annual charges, or total expense ratios (TERs), fall to 0.10%. The TERs on its passive index bond funds will fall to 0.05%.

The fees on β€œmany” of Vanguard’s small- and mid-cap US index funds will also fall by around 5 basis points to 0.10% or less.

The cuts come after rival asset managers including DWS, SSGA,Β  Invesco and Global X also undertook significant fee reductions last year as part of a long-running ETF price war.

Vanguard was founded in 1975 by Jack Bogle with the pioneering (and much-emulated) goal of providing low-cost index tracking funds to investors. It has since grown to oversee more than $10.4 trillion in assets under management.

The group has a unique structure under which it is owned by the funds managed by the company, and therefore its customers, which incentivises it to keep its fees low.

The most recent reduction in its ETF fees comes after the firm hit the headlines in December for introducing a Β£4 monthly charge for β€œDIY” users of its UK investment platform.

The new fee was initially set to apply to customers with up to Β£32,000 invested across ISAs, personal pensions and general investment accounts from 31 January this year. This date has since been extended until the end of February.

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