Not surprisingly, Vanguard, the third-largest U.S. ETF
sponsor, has something to say about the ongoing 2012 ETF fee
battle. Pennsylvania-based, known for being one of the ETF
industry's low-cost leaders, announced fee reductions for 11 of
. The fee reductions took effect last week,
according to a statement issued by Vanguard
The 11 Vanguard ETFs that are now home to lower fees include
the Vanguard Intermediate-Term Corporate Bond (NASDAQ:
), which now has an expense ratio of 0.12 percent down from 0.14
percent. The Vanguard Intermediate-Term Government Bond ETF
), the Vanguard Long-Term Corporate Bond ETF (NASDAQ:
) and the Vanguard Long-Term Government Bond ETF (NASDAQ:
) also saw fee reductions to 0.12 percent per year from 0.14
Other fee reductions include the Vanguard Mortgage-Backed
Securities Index ETF (NASDAQ:
) going to 0.12 percent from 0.15 percent. The Vanguard Russell
1000 Value Index ETF (NASDAQ:
) now charges 0.15 percent down from 0.16 percent while the
Vanguard Russell 2000 Index ETF (NASDAQ:
) saw its fees reduced to 0.21 percent from 0.22 percent.
Vanguard lowered fees on another small-cap ETF, taking the
expense ratio on the Vanguard Russell 2000 Value Index ETF
) to 0.32 percent per year from 0.33 percent. The Vanguard
Russell 3000 Index ETF (NASDAQ:
) is now charging 0.15 percent down from 0.16 percent.
The Vanguard Short-Term Corp Bond Index ETF (NASDAQ: VSCH) and
the Vanguard Short-Term Government Bond Index ETF (NASDAQ:
) both saw fee cuts to 0.12 percent per year from 0.14
Over the past year, a broad swath of ETF issuers have lowered
fees in an effort to attract fresh capital from investors.
Vanguard's most recent fee-cut announcement is by no means the
firm's first and issuers such as Charles Schwab (NYSE:
) and State Street's (NYSE:
) State Street Global Advisors (SSgA) have announced fee
reductions of their own. SSgA is the second-largest U.S. ETF
) iShares, the world's largest ETF issuer and the firm often
viewed as Vanguard's primary rival, announced fee cuts of its own
earlier this year. In late November, Invesco's (NYSE:
) PowerShares unit, the fourth-largest U.S. ETF sponsor,
signaled it would not be left out of the fee
by announcing lower fees on six of its ETFs.
For its part, Vanguard's fee cuts may not be a direct response
to what rival firms are doing, but rather the result of the
firm's corporate structure and its ability to drive cost savings
through economies of scale.
"Other investment firms may lower costs as a business strategy
to attract assets," the firm said in the statement. "For
Vanguard, our unique client-owned corporate structure is what
drives the low costs of our funds. Since we are a mutually owned
firm, low costs are an outcome that is directly tied to how much
it costs us to manage our funds. Economies of scale and a focus
on keeping operating costs low have resulted in a long track
record of Vanguard lowering costs across the board."
For more on ETFs, click
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.