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How Low Can Vanguard Go? Sector ETFs Get Expense Cuts

20.05.12

Each of the funds highlighted above will now be at least tied for the lowest expense ratio in their respective ETFdb Categories , except for VFH. There are two ETFs in the Financials Equities ETFdb Category that beat the Vanguard ETF in terms of fees; the Financial SPDR (XLF) comes in at 0.20%, while the Focus Morningstar Financial Services Index ETF (FFL) comes in at just 0.19%

Though Vanguard is one of the largest issuers of ETFs in the world, its sector-specific funds are considerably smaller than some of their most direct competitors. VDE has a healthy $1.7 billion in AUM, but that’s only about a quarter of what the Energy SPDR (XLE) boasts. Currently, the nine Sector SPDRs have about $45 billion in aggregate AUM. Vanguard’s lineup of sector ETFs represents less than $10 billion in total. 

Vanguard’s ETF presence grew considerably in 2011, thanks in large part to the cost efficiency of several popular products compared to more established competitors. Perhaps the best example of increased cost awareness among ETF investors is the comparison between Vanguard’s MSCI Emerging Markets ETF ( VWO ) and iShares MSCI Emerging Markets Index Fund ( EEM )–both of which are linked to the same index. At the end of 2009, EEM’s asset base exceeded VWO by approximately $20 billion. Since then, inflows to VWO have skyrocketed while EEM has experienced net outflows; the Vanguard fund now has close to $10 billion more in assets than its older and more established competitor. 

Source: ETF Database