Vanguard, one of the world’s largest investment companies, announced a major reduction in fees for 168 exchange-traded share classes across 87 funds. This move, effective as of Feb. 3, is expected to save investors more than $350 million this year alone.
Chief Executive Salim Ramji emphasized that this fee cut aligns with the vision of Vanguard’s founder, Jack Bogle, who aimed to create an investment company designed for the benefit of its investors. “With Vanguard, you can get both high quality and low costs,” Ramji said. “This is over $350 million of estimated savings, the largest expense cut in our history.”
Chief Investment Officer Greg Davis added that lower fees allow fund investors to keep more of their returns and give Vanguard’s funds a competitive edge.
“Our financial model and structure creates a virtuous cycle of economies of scale, where we can continue to reduce fees and invest in things like technology and talent,” he said.
Reduced fund fees benefit investors
Analysts view this move as a win for investors and a challenge to Vanguard’s competitors.
Aniket Ullal, CFRA’s head of ETF research, noted, “Vanguard’s move will pass on significant savings to investors, while also putting significant margin pressure on ETF competitors.”
KBW analyst Aidan Hall suggested that BlackRock, one of Vanguard’s main rivals, might respond by cutting fees on its core ETFs or even repricing its entire lineup, though the latter is considered unlikely. Such moves could potentially impact BlackRock’s 2026 revenue projections. Vanguard’s global chief economist, Joe Davis, advised investors to diversify their investments across the entire U.S. equity market to capture potential growth and productivity increases beyond just the technology sector.
The company recently settled charges with the Securities and Exchange Commission related to misleading statements about distributions and tax consequences for investors holding Vanguard Investor Target Retirement Funds in taxable accounts. The settlement amount will be distributed to affected investors. As Vanguard celebrates its 50th anniversary on May 1, its commitment to low fees and investor-focused strategies remains at the forefront, continuing the legacy of its founder, John Bogle, who believed in the mathematical benefits of indexing and creating a company designed for the benefit of its investors.