Vanguard Cuts Bond ETF Fees After Aggressive State Street Move

(Bloomberg) -- Vanguard lowered costs on 17 funds even closer to zero on Friday, countering a similar cut from State Street Global Advisors just two weeks prior. 

The Malvern, Pennsylvania-based issuer dropped the expense ratio to 0.04% from 0.05% for 8 of its fixed-income funds, matching the freshly-lowered fees on three of State Street’s corporate bond exchange-traded funds. Vanguard is also lowering costs across its lineup of equity ETFs and mutual funds, according to a statement. 

It’s the latest volley in the $7 trillion ETF arena’s ongoing fee war, which has reignited in the final weeks of 2021. Cutthroat competition for assets in an increasingly saturated market has taken fees on some of the biggest ETFs to near-zero levels. Vanguard -- known for its low-cost approach -- has dominated in that environment, with the $8.4 trillion asset manager poised to take in the most cash of any issuer for the second straight year, according to Bloomberg Intelligence data.

“Vanguard’s move is yet another reminder the ETF fee war never ends,” said Nate Geraci, president of The ETF Store. “The ETF space continues to be a brutally competitive existence for issuers, but utopia for cost-conscious investors.”

Vanguard’s cut also comes a day after quant giant Dimensional Fund Advisors lowered fees across 47 mutual funds and three ETFs.

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