How Vanguard plans to return $1 billion to shareholders by 2025
Costs matter. That philosophy has been hard-wired into Vanguard’s overall investment strategy since our founding.
Over the past two decades, the asset-weighted average expense ratio across all mutual funds and exchange-traded funds in the industry (except money market funds and funds-of-funds) has dropped by half.1 That staggering transformation of the industry’s fee structure speaks to the effect of our mission.
Vanguard remains committed to lowering the cost of investing. That’s why we set a goal in 2019 to return an additional $1 billion in value to shareholders by the end of 2025.
Since we set this ambitious goal, Vanguard has already reduced expense ratios and lowered fees across our investment lineup. That includes more than 225 fee reductions across Vanguard’s active and index mutual funds, ETFs, and trusts.
How Vanguard investor savings stack up
Expense ratio reductions are just one tool Vanguard uses to return value to shareholders. We’ve also lowered investor costs through multiple other channels, including by broadening access to lower-cost share classes and expanding access to commission-free brokerage transactions.
Through these channels, Vanguard has saved investors more than $450 million from 2019 through 2021, and we expect to reach $650 million in savings by the end of 2022.
In short, Vanguard is well on its way to the $1 billion goal.
How Vanguard is progressing toward $1 billion in shareholder cost savings
Note: Chart shows returned shareholder value realized and projected since 2019.
Why costs matter so much
In the end, aggressive cost savings can increase an investor’s overall chance of success. That’s because every penny that goes toward an expense ratio or brokerage fee must be overcome through investment gains before an investor will see any rise in portfolio value.
It’s no accident that our costs are 83% lower than the industry average.2 Low-cost investing is a philosophy that was integral to Vanguard’s founding and one that continues to set us apart.
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1 How Low Can Fund Fees Go? Morningstar, Inc., August 24, 2021; available at www.morningstar.com/articles/1055229/how-low-can-fund-fees-go.
2 Vanguard average expense ratio: 0.09%. Industry average expense ratio: 0.54%. All averages are asset-weighted. Industry averages exclude Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2020.