Jan 28 (Reuters) – Vanguard Group, the No. 1 U.S. mutual
fund company, says it is reducing more fees, targeting four
actively managed funds, including a 12 percent cut at the $3.3
billion Strategic Equity Fund, and many of its popular
target retirement funds.
The moves, announced on Monday and last week, followed
Vanguard’s decision last month to lower fees across dozens of
its index-tracking stock and bond funds, following similar
actions by competitors. The cuts at the actively managed funds
will help Vanguard’s three major customer groups: individual
investors who buy from Vanguard directly, 401(k) plan
participants and investment advisers.
On Monday, Vanguard said it was lowering expenses at most of
the funds in its target retirement fund series. The funds have
become a staple in 401(k) accounts and automatically allocate
money across stocks and bonds, based on an investor’s retirement
date.
According to Vanguard, about $132 billion is invested in its
target date funds. The largest is the $18.7 billion Target
Retirement 2020 Fund.
Intense competition among managers of index mutual and
exchange-traded funds (ETFs) has led to sharp price cutting
across the industry over the past few months.
BlackRock Inc, the largest ETF manager, and
brokerage firm Charles Schwab Corp both announced price
cuts last year.
Vanguard, which oversees some $2 trillion in assets, also
said it raised the expense ratio at one fund, the $715 million
Vanguard Growth Equity Fund, which seeks long-term
capital appreciation among mid-size and large companies. The
expense ratio went to 0.54 percent from 0.52 percent, a rise of
3.8 percent.
For the most part, the latest expense cuts were effective
Jan. 25 and aimed at solidifying its low-cost advantage compared
to peers.
At the dividend-seeking $10 billion Vanguard Equity Income
Fund, the expense ratio for investor shares was
lowered to 0.30 percent from 0.31 percent, a reduction of 3.2
percent.
The peer average expense ratio is 1.27 percent, according to
Lipper Inc, a Thomson Reuters company.
The $4.7 billion Vanguard PRIMECAP Core Fund,
targeting out-of-favor stocks, cut its expense ratio to 0.50
percent from 0.51 percent, a reduction of 2 percent.
The biggest cut was at the Vanguard Strategic Equity Fund,
which lowered its expense ratio 12 percent to 29 basis points,
or 0.29 percent, from 0.33 percent. The fund invests in small-
and mid-cap U.S. stocks.
The $261 million Vanguard Strategic Small-Cap Equity
, which hunts for small, growth-oriented companies, cut
its expense ratio to 0.40 percent from 0.43 percent, a reduction
of 7 percent.
