By Nick Thornton
Vanguard has announced another series of lowered expense ratios
to funds available to both retail and institutional markets.
The latest report on the savings yielded from lower expense ratios in fiscal year 2015 shows investors captured $55 million in discounts.
Those savings were actualized across share classes and investment styles.
The cost of 42 individual mutual fund shares were reduced. And the cost of seven ETFs available to retail investors were also reduced, featuring expense ratios as low as 13 basis points.
Last month, the Valley Forge, Pennsylvania-based Vanguard announced its Vanguard Target Retirement Fund
series have been reduced two basis points in 2015. The funds are available to plan participants for 14 to 16 basis points.
Institutional Plus shares, access to which requires $200 million of invested plan assets, of Vanguard’s Total International Stock Fund are now available for seven basis points.
Institutional class shares of its global real estate index fund are available for 16 basis points, down from 22 in 2014.
And institutional and institutional plus shares of Vanguard’s European equity index fund are available for nine and eight basis points respectively.
The company says the continued price declines are a result of the funds’ strong management performance.
Also, the money flowing into Vanguard funds gives the company pricing advantages it can pass on to retail and institutional investors.
As of the end of December 2015, Vanguard managed $3.4 trillion in assets, and the average expense ratio among all funds was 18 basis points in 2014.
By comparison, the firm managed $1.8 billion in 1975, when the average fund expense ratio was 89 basis points.
Also in 2015, Vanguard funds benefited from $236 billion in new inflows, an industry record
"The continued adoption of the Vanguard way of investing, coupled with asset growth related to favorable financial markets, enables us to reduce the cost of investing for all our investors from financial advisors and institutional investors to IRA savers and 529 plan holders," said Vanguard CEO Bill McNabb, in a company release.
"While Vanguard has some of the lowest-cost mutual funds and ETFs in the industry, low costs have not come at the expense of providing competitive investment performance, a broad array of funds and other services, and a high level of client service," he added.
Originally posted on BenefitsPro.com