The Vanguard Group is known for its cheap exchange traded fund (ETF) products, and it looks like the fund provider is going to reinforce its persona by further reducing prices on a few ETFs.
The company stated that “the reductions are a function of the way Vanguard funds operate: When funds experience greater efficiencies—either through asset growth, operating cost reductions, or a combination of both, the savings are delivered to the fund owners in the form of lower expenses,” reports Olivier Ludwig for IndexUniverse.
Vanguard has cut the price of its Vanguard Emerging Markets ETF (NYSEArca: VWO) by 18%, making the fund the world’s cheapest. VWO now has an expense ratio of 0.22%, down from its previous 0.27%.
The fund provider also slashed expense ratios on five other of its products, including:
- Vanguard MSCI Pacific ETF (NYSEArca: VPL) to 0.14% from 0.16%
- Vanguard MSCI European ETF (NYSEArca: VGK) to 0.14% from 0.16%
- Total World Stock ETF (NYSEArca: VT) to 0.25% from 0.30%
- FTSE All-World ex-U.S. Index (NYSEArca: VEU) to 0.22% from 0.25%
- FTSE All-World ex-U.S. Small Cap (NYSEArca: VSS) to 0.33% from 0.40%
Industry observers note that the asset-gathering battle within the ETF industry will be waged by pricing. Schwab, which has its own line of low cost ETFs, has indicated that it will offer low-priced ETFs aimed at beating Vanguard. Schwab spokeswoman Alyson Nikulicz commented that “for all Schwab ETFs, we seek to provide the best value for investors by offering funds that have among the lowest operating expense ratios and total cost of ownership, and will continue to do so.”
For more information on ETFs, visit our ETF 101 category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.