VONV Vanguard Russell 1000 Value

Vanguard has long been the king of low cost products. Its structure, which has the ETFs be a separate share class of Vanguard Index funds,—along with its client ownership system—has allowed the firm to charge some of the cheapest expense ratios in the entire industry.

While Vanguard has long dominated this corner of the market, we have recently seen an upstart come in and rival or even beat out Vanguard on fees, Charles Schwab. The massive broker has made a name for itself by slashing fees to rock bottom levels on a number of its top products, putting it into direct competition with Vanguard in a number of key segments.

Vanguard cannot have been happy about this development and has moved to reduce fees on many of its funds in the recent past as well. In fact, the firm just announced a new plan to slash fees on almost two dozen ETFs, marking an interesting end to the ETF fee war of 2012 (see Four Vanguard ETFs for Long Term Investors).

 Below, we highlight this group of ETFs which goes into sector, broad market, and various corners of the bond world in this latest development to have the lowest cost lineup in the ETF world.

In terms of equity products the list includes:

 

ETF	Symbol	Old Expense Ratio	New Expense Ratio
Consumer Discretionary	VCR	0.19%	0.14%
Consumer Staples	VDC	0.19%	0.14%
Energy	VDE	0.19%	0.14%
Financials	VFH	0.23%	0.19%
Health Care	VHT	0.19%	0.14%
Industrials	VIS	0.19%	0.14%
Info Technology	VGT	0.19%	0.14%
Materials	VAW	0.19%	0.14%
Russell 1000 Value	VONV	0.16%	0.15%
Russell 2000	VTWO	0.22%	0.21%
Russell 2000 Value	VTWV	0.33%	0.32%
Russell 3000	VTHR	0.16%	0.15%
Telecoms	VOX	0.19%	0.14%
Utilities	VPU	0.19%	0.14%

As you can see the cuts aren’t too much in a number of products, and especially so in the Russell based ETFs. However, for the rest, while the total basis point reduction might not be much, it does represent a significant cut on a percentage basis (also see Five Cheaper ETFs You Probably Overlooked).

Meanwhile, bonds also saw some cuts as well including the following ETFs:

 

ETF	Symbol	Old Expense Ratio	New Expense Ratio
Int. Term Corp Bond	VCIT	0.14%	0.12%
Int. Term Govt Bond	VGIT	0.14%	0.12%
Long Term Corp Bond	VCLT	0.14%	0.12%
Long Term Govt Bond	VGLT	0.14%	0.12%
Mortgage Backed	VMBS	0.15%	0.12%
Extended Treasury	EDV	0.13%	0.12%
Short Term Corp Bond	VCSH	0.14%	0.12%
Short Term Govt Bond	VGSH	0.14%	0.12%

Obviously the cuts here were by and large less than what investors saw in the equity world from Vanguard. However, expenses were already lower to begin with, so there was less to cut anyway (also see Vanguard Joins TIPS ETF Fight with VTIP).

Bottom Line

Even with some big cuts to the fees for some of its most popular ETFs, Vanguard hasn’t been able to keep the title of cheapest ETF provider in a few important categories that target the broader market. It has, thanks to this latest cut, been able to reclaim the mantle in the all-important sector space though, so if the investor trend into low cost products continues, this most recent move could keep Vanguard ahead of the pack (see Five Great Global ETFs for Complete Equity Exposure).

Low cost options have certainly helped Vanguard, as the firm is now closing in on State Street for second place in terms of total ETF AUM. At last check, the company has $242 billion in ETF assets, just a few billion shy of State Street’s total, suggesting that if this recent cut can spur inflows, we could see Vanguard in second place behind iShares at some point in 2013.

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VIPERS-MATERIAL (VAW): ETF Research Reports
 
VIPERS-CONS DIS (VCR): ETF Research Reports
 
VIPERS-CONS STA (VDC): ETF Research Reports
 
VIPERS-ENERGY (VDE): ETF Research Reports
 
VIPERS-FINANCL (VFH): ETF Research Reports
 
VIPERS-INFO TEC (VGT): ETF Research Reports
 
VIPERS-HLTH CR (VHT): ETF Research Reports
 
VIPERS-INDUS (VIS): ETF Research Reports
 
VANGD-RUS 1000V (VONV): ETF Research Reports
 
VANGD-RUS 3000 (VTHR): ETF Research Reports
 
VANGD-RUS 2000 (VTWO): ETF Research Reports
 
VANGD-RUS 2000V (VTWV): ETF Research Reports
 
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