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Vanguard announced reduced management fees on 53 investment funds on Feb. 2, continuing an industry trend toward lower administrative costs for mutual funds and ETFs.
The fee reductions will save investors nearly $250 million in 2026, according to the investment firm.
In the past two years, Vanguard has trimmed fees and yielded almost $600 million in investor savings, the company said. The average “expense ratio” for a Vanguard fund now stands at 0.06%, or six cents out of every $100.
A year ago, Vanguard cut management fees for 87 investment funds and said the reductions were the largest in company history.
Vanguard is the second-largest asset manager, after BlackRock, according to the Sovereign Wealth Fund Institute. Vanguard has $12 trillion in assets under management.
What is an expense ratio?
In the investment industry, an expense ratio is the annual cost of owning a mutual fund or exchange-traded fund. It’s basically a management fee, paid by the investor to the management firm.
The fee is expressed as a percentage of your investment. Fees tend to be higher on actively managed funds and lower on “passive” funds, which track the performance of a market index.
Any fee higher than 1% “is high and should be avoided,” Bankrate said in a June 2025 report.
Expense ratios have been going down. The average fee on a stock mutual fund has dwindled from 0.99% in 2000 to 0.4% in 2024 on an asset-weighted basis, a calculation that favors larger funds, according to Bankrate.
Many passive funds now have expense ratios below 0.1%, or 10 cents per $100.
The gradual decline in expense ratios reflects a shift toward no-load funds, which typically do not charge a fee or commission when you buy or sell shares, according to a March 2025 report from the nonprofit Investment Company Institute.
Between 1996 and 2024, the institute said, expense ratios for stock mutual funds declined by 62%. Expense ratios for bond funds dropped by 55%.
Which Vanguard funds have lower fees?
Here are a few examples of newly lowered fees for Vanguard funds:
- For the Vanguard Total Stock Market Index Fund, the expense ratio declined from 0.14% to 0.06%.
- For the Vanguard Total International Bond Index Fund, the expense ratio dropped from 0.06% to 0.03%.
- For the Vanguard International High Dividend Yield ETF, the expense ratio dropped from 0.17% to 0.07%.
Vanguard is owned by the funds it manages, company officials said, a structure that enables it to return value to investors.
“Vanguard is investor-owned—we have no outside stockholders or inside owners profiting from our clients,” said Salim Ramji, Vanguard’s CEO, in a release. “These fee reductions—more than half a billion dollars over the past two years—are a clear expression of our purpose and commitment to our clients as owners.”