Sunday, October 4th, 2015

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Vanguard Slashes Fees in a Bid to Attract Cost-Conscious Customers

Vanguard is cutting fees on some of its index funds.Institutional investment giant Vanguard Group is already the nation's largest mutual fund company – and it's lowering fees in a bid to capture even more of the market.

Vanguard said Wednesday that it is slashing fees for people who have at least $10,000 parked in one of its 17 index funds. Index funds – which track the performance of the broader stock market – are the cornerstone of Vanguard's business, and they've grown more popular in recent years.

Since 2000, Morningstar data shows, the proportion of equity funds that are passively managed has risen by 33 percent. Investors' interest in passive funds has helped Vanguard supplant Fidelity Investments as the nation's No. 1 fund manager by assets.

Index funds are a great choice for people who don't want to be bothered managing stocks – and in the wake of Vanguard's fee reductions, the company's passive funds could be an even more attractive option for expense-averse investors. In general, it's smart to seek out low-fee funds: Morningstar reported recently that funds with smaller fee structures historically outperform more-expensive ones.

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