While VFIAX is one basis point more expensive than Schwab S&P 500 Index (SWPPX), VOO’s fee matches iShares S&P 500 (IVV) and will help Vanguard narrow the minor potential performance gap between its offerings and competing products. They all hold the same large-cap securities at the same weighting and management does a similarly strong job tracking the index.

However, most of the other fee cuts occurred at ETF or mutual fund products that are not identically constructed to their passive peers.

For example, the expense ratio for Vanguard FTSE Developed Markets ETF (VEA) fell by two basis points to 0.07%. This makes VEA one basis point cheaper than iShares Core MSCI EAFE Index (IEFA). However, IEFA’s 11.2% year to date gain through April 27 was ahead of VEA’s 10.4% as performance is driven more holdings than fees. VEA has exposure to Canada (8% of assets) not found in IEFA and it has a lower stake in France and Germany.

As more money moves to lower-fee passive products, we expect asset managers offering active alternatives will need to find ways to bring costs. Because the case for charging 100 basis points or more than a Vanguard, iShares or Schwab product is dependent upon consistently outperforming, a task that hard for many to do.

Todd Rosenbluth is Director of ETF & Mutual Fund Research at CFRA.