In February 2025, Vanguard announced its largest-ever expense ratio cut. The corporate move positively impacted 87 funds and will result in investors saving $350 million1.
The fee reductions are particularly notable in the active bond category. Following the changes, according to Vanguard, every fund in their active bond lineup was in the lowest decile of their Morningstar category2.
In the video below, Sara Devereux, Vanguard’s Global Head of Fixed Income, discussed these changes. She referenced how Jack Bogle used to say, “You get what you don’t pay for.” Devereux added that high fees can lead to risky performance-chasing by portfolio managers. Meanwhile, Vanguard’s lower fees allow for a more disciplined approach.
Vanguard offers a suite of actively managed bond ETFs and mutual funds to support advisors and their clients. The lineup is diverse to appeal to a range of risk tolerances.
For more news, information, and analysis, visit the Fixed Income Channel.
1 Comparison uses AUM as of 11/2024. There is no guarantee that any individual investor will save money due to the reductions in expense ratios. Figures are estimates and should not be relied on. For illustrative purposes only. See https://advisors.vanguard.com/engagement/fixed-income for details.
2 All competitor fund data sourced from Morningstar Direct as of November 2024. The combination of Morningstar Category, Investment Type, and Management Style define Vanguard’s category. Lowest decile expense ratios are calculated excluding Vanguard funds. Vanguard’s updated expense ratios (effective February 1, 2025) were compared to the lowest decile expense ratios in each category. Summing all active fixed income funds that were less than or equal to the lowest decile expense ratio and dividing by total active fixed income funds resulted in 100% of funds in the lowest cost decile.
Disclosure Information:
Visit vanguard.com to obtain a Vanguard fund prospectus, or, if available, a summary prospectus, which contains investment objectives, risks, charges, expenses, and other information; read and consider carefully before investing.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
All investing is subject to risk, including the possible loss of the money you invest. Investments in bonds are subject to interest rate, credit, and inflation risk.
Vanguard is reducing expense ratios for certain share classes of some funds. There is no guarantee that any individual investor will save money due to the reductions in fund expense ratios. Not all fund share classes will have a reduced expense ratio and therefore not all investors will experience the estimated savings. Investors that purchase the relevant funds after the expense ratios have been reduced will not experience savings. Savings means future money not spent on expense ratios, and does not entail a rebate or deposit of any sort. These savings figures are estimates and should not be relied upon. Savings is based on data as of November 30, 2024; if other data is used, savings may differ. Estimated savings accrue to existing investors holding relevant share classes for 2024 and 2025. For illustrative purposes only. Past performance is not indicative of future results.
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