Vanguard Group on Friday reported expense ratio reductions on four bond exchange-traded funds, including its biggest bond ETF — the Vanguard Total Bond Market ETF, a Vanguard spokesman said.
The ETF fee cuts were part of expense ratio changes Vanguard announced for six funds and reflect expenses for the fiscal year ended Dec. 31, the spokesman said. The changes also included fee increases on two mutual funds spanning three share classes, he said.
The Vanguard Total Bond Market ETF's expense ratio dropped to 0.03%, down half a basis point from the 2020 fiscal-year-end expense ratio. The fund had $83.4 billion in assets as of March 31, the spokesman said.
The $13.1 billion Vanguard Intermediate-Term Bond ETF, the $5 billion Vanguard Long-Term Bond ETF and $37.3 billion Vanguard Short-Term Bond ETF each had their expense ratio drop by a basis point to 0.04% each.
"Vanguard has experienced strong inflows into its fixed-income ETFs in the past year and as per usual brings fees down on popular funds due to its unique ownership structure," said Todd Rosenbluth, head of research at ETF Trends, a provider of news and education in the ETF space.
Malvern, Pa.-based Vanguard is owned by its member funds, which in turn are owned by fund shareholders, the Vanguard spokesman said.
"It enables us to return value to shareholders through lower costs and re-investments to improve their client experience," he said.
The ETF expense ratio reductions Vanguard announced combined with prior fee reductions from BlackRock's iShares, give institutional investors "multiple low-cost products to consider to gain liquid, diversified access to the bond market," Mr. Rosenbluth said.
Securities and Exchange Commission filings dated March 31 revealed fee cuts to several iShares ETFs, including the iShares Core U.S. Aggregate Bond ETF. That fund, which had net assets of $82.9 billion as of Thursday, saw its net expense ratio drop to 0.03% effective March 31 from 0.04% .
"We expect usage of fixed-income ETFs to continue to climb higher at insurance companies, hedge funds and other institutions," Mr. Rosenbluth said.
The two mutual funds to see expense increases included the Vanguard Managed Allocation Fund, which saw its expense ratio increase to 0.31% from 0.28%. The other was the Vanguard Market Neutral Fund, which saw expenses increase by 13 basis points on both its investor shares and institutional shares classes to 1.31% and 1.25%, respectively.
A BlackRock spokesman Friday declined to comment regarding the expense ratio changes Vanguard announced.
