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There are few certainties in life beyond death and taxes, but one of them is that you can always count on Vanguard Group to cut fees.
The nation’s second-largest asset manager kicked off 2026 by once again cutting costs on a slew of exchange-traded funds (ETFs) and mutual funds. The move is part of a multi-year effort to save investors’ hard-earned capital and boost their long-term returns.
Of course, this is just what Vanguard does. The late, great Jack Bogle was keenly aware of the pernicious effects of costs on long-term performance. The Vanguard founder famously admonished folks never to allow the “tyranny of compounding costs” to overwhelm the magic of compound returns.
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Put another way, Bogle said that when it comes to investing, “you get what you don’t pay for.”
No wonder Vanguard recently announced another sweeping round of cost reductions. Heck, the latest move slashes fees on a quarter of its U.S. funds. In total, 53 funds received a 27% fee reduction, on average, in early February, Vanguard said. The firm now boasts an asset-weighted average expense ratio of 0.06%. That equates to 60 cents on every $1,000 invested.
Vanguard expects to deliver nearly $250 million in savings to investors this year alone. Combined with last year’s fee cuts, investors are expected to save a staggering $600 million, Vanguard said.
“These fee reductions – set to deliver more than half a billion dollars in savings across 2025 and 2026 – are a clear expression of our purpose and commitment to our clients as owners,” Vanguard CEO Salim Ramji said in a statement. “When investors keep more of what they earn, the benefits compound over the long term, helping our clients achieve their most important financial goals.”
Higher costs, lower wealth
Bogle’s argument against costs was both elegant and elementary: every dollar you pay to an asset manager is a dollar that stops compounding for you.
Over a 50-year investment horizon, even a seemingly modest 1% annual fee can erode nearly half of your potential ending wealth. That’s why Vanguard has cut fees and expense ratios more than 2,000 times since Bogle founded the firm in 1975. Expense ratios that started at 0.50% now average 0.06%. That’s a very big deal.
Have a look at the table below to get a sense of the changes to some of Vanguard’s biggest and most popular funds.
|
Fund (Ticker) |
New Fee |
Previous Fee |
|
Vanguard Growth ETF (VUG) |
0.03% |
0.04% |
|
Vanguard Value ETF (VTV) |
0.03% |
0.04% |
|
Vanguard FTSE Developed Markets ETF (VEA) |
0.04% |
0.05% |
|
Vanguard FTSE Emerging Markets ETF (VWO) |
0.07% |
0.08% |
|
Vanguard Dividend Appreciation ETF (VIG) |
0.05% |
0.06% |
|
Vanguard Total International Stock ETF (VXUS) |
0.05% |
0.07% |
|
Vanguard Total Stock Market Index Fund (VTSMX) |
0.06% |
0.14% |
|
Vanguard LifeStrategy Growth Fund (VASGX) |
0.10% |
0.14% |
Importantly, Vanguard’s relentless attack on fees benefits all investors because other asset managers are forced to compete on price. Indeed, the so-called Vanguard Effect has been revolutionary for retail investors. There’s even an argument to be made that lower fees (and commission-free trading) boost equity valuations.
Vanguard notes that lower costs are directly correlated to the long-term performance of the firm’s mutual funds and ETFs. Need receipts? About 84% of Vanguard funds have outperformed their peer group averages over the past decade, including 88% of its active fixed-income funds, according to LSEG Lipper data.
If nothing else, Vanguard’s latest cuts should prompt folks to double-check what they hold. If you own funds that charge, say, 0.50% for only market-matching returns, it’s time to make some changes to your portfolio.
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