Overall, ETF fees have been on a downslide for several years, as more providers are launching funds. Vanguard was the token provider known for their low fees within the ETF industry, setting the bar for affordable funds. In 2011, there were about 94 fee cuts within the ETF industry, however, this years fee cuts stand out, reports Makan.
Industry insiders call the fee wars “The Vanguard Effect” in which the investor-owned fund manager has helped keep fees low and attract market share in turn. Price competition among the big three has been intense because expense ratios were already set somewhat low, as the majority of ETFs are passively tracking an index. [In the ETF Price War, the Winner Is…]
“Our competitors may call this a price war, but we are simply passing on economies of scale. If others follow suit, the result is cheaper products for investors,” said John Woerth, a spokesman for Vanguard, in the FT story.
Tisha Guerrero contributed to this article.