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The Vanguard Effect

What is The Vanguard Effect®?

It's a nickname that was coined by independent experts as a way to describe a game of "follow the leader" that started more than 40 years ago.

"… expense ratios for a market's mutual funds and ETFs tend to drop when low-cost pioneer Vanguard jumps in."

"The company's influence leads other funds to lower their fees in order to better compete."


"… the pressure that the giant's meagre fees put on others to cut costs. Some rivals now sell passive products priced specifically to match or undercut it."


One company transforms an entire industry

Our passion for low-cost investing was—and will always be—one of our driving forces. When others take notice and expense ratios fall more broadly, every investor wins!

The Vanguard Effect (graph): Vanguard vs. industry average expense ratios, 1975-2015

All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2016.


It's in our DNA

No one wants to pay more than they have to—for anything. That's the foundation for Vanguard's existence, so it's as natural to us as it is to you.

Lower costs = more returns

Every penny you save on expenses is a penny that stays in your pocket—where it belongs.

Independent research confirms that, on average, lower-cost funds outperform higher-cost funds.

Every fund, every day

Vanguard (the company) is owned by the Vanguard funds—which are, in turn, owned by you as a fund shareholder. There are no outside owners, so there are no conflicting loyalties.

You pay only what it costs us to run your fund and to continuously improve the service we provide to you.

A core investing principle

When you combine low costs with a goal-oriented, balanced, and disciplined approach to investing, you can feel more confident that you're on the path to long-term success.

REFERENCE CONTENT

Layer opened.

One company transforms an entire industry

Here's how asset-weighted average expense ratios have changed over time for both Vanguard and the broader investment industry.


YEAR

1975

VANGUARD AVERAGE EXPENSE RATIO

0.68%

INDUSTRY AVERAGE EXPENSE RATIO

0.73%


YEAR

1976

VANGUARD AVERAGE EXPENSE RATIO

0.61%

INDUSTRY AVERAGE EXPENSE RATIO

0.64%


YEAR

1977

VANGUARD AVERAGE EXPENSE RATIO

0.61%

INDUSTRY AVERAGE EXPENSE RATIO

0.64%


YEAR

1978

VANGUARD AVERAGE EXPENSE RATIO

0.62%

INDUSTRY AVERAGE EXPENSE RATIO

0.68%


YEAR

1979

VANGUARD AVERAGE EXPENSE RATIO

0.58%

INDUSTRY AVERAGE EXPENSE RATIO

0.69%


YEAR

1980

VANGUARD AVERAGE EXPENSE RATIO

0.59%

INDUSTRY AVERAGE EXPENSE RATIO

0.68%


YEAR

1981

VANGUARD AVERAGE EXPENSE RATIO

0.59%

INDUSTRY AVERAGE EXPENSE RATIO

0.62%


YEAR

1982

VANGUARD AVERAGE EXPENSE RATIO

0.61%

INDUSTRY AVERAGE EXPENSE RATIO

0.65%


YEAR

1983

VANGUARD AVERAGE EXPENSE RATIO

0.60%

INDUSTRY AVERAGE EXPENSE RATIO

0.74%


YEAR

1984

VANGUARD AVERAGE EXPENSE RATIO

0.54%

INDUSTRY AVERAGE EXPENSE RATIO

0.76%


YEAR

1985

VANGUARD AVERAGE EXPENSE RATIO

0.50%

INDUSTRY AVERAGE EXPENSE RATIO

0.77%


YEAR

1986

VANGUARD AVERAGE EXPENSE RATIO

0.46%

INDUSTRY AVERAGE EXPENSE RATIO

0.77%


YEAR

1987

VANGUARD AVERAGE EXPENSE RATIO

0.40%

INDUSTRY AVERAGE EXPENSE RATIO

0.85%


YEAR

1988

VANGUARD AVERAGE EXPENSE RATIO

0.40%

INDUSTRY AVERAGE EXPENSE RATIO

0.87%


YEAR

1989

VANGUARD AVERAGE EXPENSE RATIO

0.35%

INDUSTRY AVERAGE EXPENSE RATIO

0.88%


YEAR

1990

VANGUARD AVERAGE EXPENSE RATIO

0.35%

INDUSTRY AVERAGE EXPENSE RATIO

0.86%


YEAR

1991

VANGUARD AVERAGE EXPENSE RATIO

0.32%

INDUSTRY AVERAGE EXPENSE RATIO

0.86%


YEAR

1992

VANGUARD AVERAGE EXPENSE RATIO

0.31%

INDUSTRY AVERAGE EXPENSE RATIO

0.84%


YEAR

1993

VANGUARD AVERAGE EXPENSE RATIO

0.30%

INDUSTRY AVERAGE EXPENSE RATIO

0.80%


YEAR

1994

VANGUARD AVERAGE EXPENSE RATIO

0.30%

INDUSTRY AVERAGE EXPENSE RATIO

0.84%


YEAR

1995

VANGUARD AVERAGE EXPENSE RATIO

0.31%

INDUSTRY AVERAGE EXPENSE RATIO

0.82%


YEAR

1996

VANGUARD AVERAGE EXPENSE RATIO

0.29%

INDUSTRY AVERAGE EXPENSE RATIO

0.79%


YEAR

1997

VANGUARD AVERAGE EXPENSE RATIO

0.28%

INDUSTRY AVERAGE EXPENSE RATIO

0.77%


YEAR

1998

VANGUARD AVERAGE EXPENSE RATIO

0.28%

INDUSTRY AVERAGE EXPENSE RATIO

0.77%


YEAR

1999

VANGUARD AVERAGE EXPENSE RATIO

0.27%

INDUSTRY AVERAGE EXPENSE RATIO

0.78%


YEAR

2000

VANGUARD AVERAGE EXPENSE RATIO

0.27%

INDUSTRY AVERAGE EXPENSE RATIO

0.81%


YEAR

2001

VANGUARD AVERAGE EXPENSE RATIO

0.27%

INDUSTRY AVERAGE EXPENSE RATIO

0.74%


YEAR

2002

VANGUARD AVERAGE EXPENSE RATIO

0.26%

INDUSTRY AVERAGE EXPENSE RATIO

0.74%


YEAR

2003

VANGUARD AVERAGE EXPENSE RATIO

0.25%

INDUSTRY AVERAGE EXPENSE RATIO

0.78%


YEAR

2004

VANGUARD AVERAGE EXPENSE RATIO

0.22%

INDUSTRY AVERAGE EXPENSE RATIO

0.81%


YEAR

2005

VANGUARD AVERAGE EXPENSE RATIO

0.22%

INDUSTRY AVERAGE EXPENSE RATIO

0.78%


YEAR

2006

VANGUARD AVERAGE EXPENSE RATIO

0.21%

INDUSTRY AVERAGE EXPENSE RATIO

0.77%


YEAR

2007

VANGUARD AVERAGE EXPENSE RATIO

0.18%

INDUSTRY AVERAGE EXPENSE RATIO

0.75%


YEAR

2008

VANGUARD AVERAGE EXPENSE RATIO

0.19%

INDUSTRY AVERAGE EXPENSE RATIO

0.69%


YEAR

2009

VANGUARD AVERAGE EXPENSE RATIO

0.21%

INDUSTRY AVERAGE EXPENSE RATIO

0.65%


YEAR

2010

VANGUARD AVERAGE EXPENSE RATIO

0.19%

INDUSTRY AVERAGE EXPENSE RATIO

0.65%


YEAR

2011

VANGUARD AVERAGE EXPENSE RATIO

0.17%

INDUSTRY AVERAGE EXPENSE RATIO

0.65%


YEAR

2012

VANGUARD AVERAGE EXPENSE RATIO

0.15%

INDUSTRY AVERAGE EXPENSE RATIO

0.64%


YEAR

2013

VANGUARD AVERAGE EXPENSE RATIO

0.14%

INDUSTRY AVERAGE EXPENSE RATIO

0.63%


YEAR

2014

VANGUARD AVERAGE EXPENSE RATIO

0.14%

INDUSTRY AVERAGE EXPENSE RATIO

0.63%


YEAR

2015

VANGUARD AVERAGE EXPENSE RATIO

0.13%

INDUSTRY AVERAGE EXPENSE RATIO

0.61%


YEAR

2016

VANGUARD AVERAGE EXPENSE RATIO

0.12%

INDUSTRY AVERAGE EXPENSE RATIO

0.62%


Sources: Vanguard and Morningstar, Inc.