Vanguard Takes Another Swing in Ongoing ETF Fee War

Vanguard Total International Stock ETF (NasdaqGM: VXUS) down two basis points to 0.11%.

Vanguard Total World Stock ETF (NYSEArca: VT) down three basis points to 0.11%.

Vanguard Emerging Markets Government Bond ETF (NasdaqGM: VWOB) down two basis points to 0.32%.

Vanguard Total International Bond ETF (NasdaqGM: BNDX) down three basis points to 0.12%.

Vanguard Tax-Exempt Bond Index ETF (NYSEArca: VTEB) down three basis points to 0.09%.

“Lower fees for ETFs will continue to encourage advisors and investors to seek out passive management to build portfolios rather than rely on more expensive and often underperforming active products,” Todd Rosenbluth, head of mutual fund and ETF research at CFRA Research, said in a note.

Warren Buffett also recently released his annual letter, and in it he again advised, investors should “stick with low-cost index funds,” which Buffett has said in prior letters.

Passive, index-based ETFs are some of the cheapest investment tools available to investors as the wrapper may allow anyone to gain access to broad market equity and bond exposure for 10 basis points or less. About 99% of Vanguard’s U.S.-domiciled ETFs fall within the lowest cost quarter of all ETFs.

“The demand for low-cost funds and ETFs, along with intense competition, have made investing far more affordable today than ever before,” McNabb added. “With the broad availability of low-cost options, investors – whether on their own or with the help of a financial advisor or employer – need to focus on the other factors that can lead to investing success, including saving more, developing a suitable asset allocation, using broadly diversified funds, and maintaining discipline through market ups and down.”

Nevertheless, investors should keep in mind that no two ETFs are the same, and the underlying indices or strategies may more than make up for any discrepancies between two ETFs’ expense ratios in long-term performance returns.

“However, it remains important that ETFs are not chosen just for their fees as the country exposure differences of international equity and bond ETFs impacts performance,” Rosenbluth added.

Vanguard’s changes were all for the better. The Vanguard International High Dividend Yield ETF (NasdaqGM: VYMI), the international version of VYM, saw its expense ratio rise 2 basis points to 0.32%.