Vanguard has recently unveiled a new reduction in expense ratios across 53 of its funds, impacting approximately 25% of their lineup, with total fee cuts nearing $250 million for 2026. For more details, refer to their press release and the comprehensive list of adjustments. This announcement follows their significant reductions made in February 2025, which affected 87 funds and resulted in an estimated $350 million in savings that year.
Over the last two years, Vanguard has decreased fees for the majority of its fund offerings, culminating in almost $600 million in investor savings—Vanguard’s largest two-year cost reduction to date. The average expense ratio across Vanguard’s diverse product offerings now stands at just 0.06%, solidifying the firm’s reputation for cost leadership. Such consistently low fees enable investors to retain more of their returns, which can lead to enhanced long-term performance.
For further insights, you can check out additional media coverage from the Wall Street Journal (gift article) and Morningstar.
Currently, many of Vanguard’s major funds feature such low expense ratios that individual investors may not perceive significant differences. Funds like VTI, VXUS, and BND remain unchanged, as do the Target Retirement funds. Nevertheless, this trend of cost reduction is a positive sign that Vanguard is committed to lowering expenses, even as their assets under management continue to rise.
It’s crucial for individual investors to acknowledge that costs have a direct impact on performance. Jack Bogle’s earlier skepticism towards ETFs is notable, as the sector has seen a proliferation of complex and expensive options over time. While the overall, asset-weighted average expense ratio for ETFs has decreased, newly launched ETFs are actually seeing an increase in their average fees. Exercise caution with the appealing new ETFs promising features like limited downside and high dividend yields. Often termed “Boomer candy,” these funds typically come with elevated expense ratios and are likely to underperform in the long run. The narrative remains the same: new tricks, old challenges.
On a personal note, I’ve observed that the Vanguard 0–3 Month Treasury Bill ETF (VBIL) has reduced its expense ratio from 0.07% to 0.06%. Currently, I favor the iShares 0-3 Month Treasury Bond ETF (SGOV), which has an expense ratio of 0.09%.
The median bid/ask spread over 30 days for VBIL is now 0.01% of its market price, placing its liquidity at par with SGOV (which also stands at 0.01%). I anticipate transitioning to VBIL instead of SGOV when I need a short-term cash equivalent in my brokerage account. While a 0.03% difference may seem trivial, it’s worthwhile to continue promoting lower costs. Long live the Vanguard Effect!
