Vanguard Just Slashed Mutual Fund Fees Like Never Before

Vanguard Investments just sent an early Valentine’s gift to its millions of investors.

The investment management company has cut the expense ratio on 168 share classes across 87 mutual funds and exchange-traded funds (ETFs). Vanguard says this is the largest expense-ratio cut in its 50-year history and will save investors more than $350 million this year alone.

An expense ratio is the annual cost of owning a mutual fund or ETF, expressed as a percentage of the amount invested. If you invest $1,000 in a fund with a 1% expense ratio, for example, that means it’d cost you $10 per year to own that fund.

While expense ratios might seem small, they can add up to a lot of money over time, taking a considerable chunk out of your returns. So, it’s important to minimize these costs whenever possible.

In a statement announcing the latest expense ratio reductions, Vanguard CEO Salim Ramji says:

“We’re proud to build on Vanguard’s legacy of lowering the costs of investing — which we have done more than 2,000 times since our founding — by announcing our largest ever set of expense ratio reductions. Lower costs enable investors to keep more of their returns, and those savings compound over time.”

Some of the funds that now have lower expense ratios include:

• Total Bond Market Index Fund (VBTLX) Admiral Shares: 0.04% (down from 0.05%)
• Total International Stock ETF (VXUS): 0.05% (down from 0.08%)
• FTSE Emerging Markets ETF (VWO): 0.07% (down from 0.08%)
• Treasury Money Market Fund (VUSXX) Investor Shares: 0.07% (down from 0.09%)
• FTSE Developed Markets ETF (VEA) Admiral Shares: 0.03% (down from 0.06%)

You can find a full list of all funds with cost reductions — all of which are effective Feb. 1, 2025 — at the Vanguard website.

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Vanguard says that as of the end of 2023, its average mutual fund and ETF expense ratio was 0.08%, compared to an industry average of 0.44%.

The firm says 84% of its funds beat the average performance of competing funds from 2015 through 2024, an accomplishment it attributes to the low costs it charges investors. The company says 91% of its active bond funds and 100% of its money market funds topped the average results of peers.

More than 50 million people have investments with Vanguard, making it one of the world’s biggest investment management companies.