The primary explanation is that timing discrepancies can arise between the NAV and the trading price of the Fund. dollars.ĭownload Chart Data (.CSV) How can the Fund trade at a premium/discount to its NAV? Here’s a chart showing the “ Vanguard Effect“.ĭue to the combination of Vanguard’s excellent ETFs and their not-as-excellent customer service recently, you may want to consider buying Vanguard ETFs for free at your preferred brokerage firm including Fidelity, Schwab, TD Ameritrade, and E-Trade.Holdings are subject to change. If Vanguard hasn’t pushed the cost down in a specific area, their competitors know that and keep the costs high. The super-low-cost ETFs only exist where Vanguard has already established itself. However, you can’t ignore the fact that Vanguard has been the leader in the industry. I have bought ETFs from other providers when they are the best available option. However, I think competition is great and even Vanguard needs to be kept on its toes. Every subsequent “price drop” is less newsworthy or impactful to my portfolio. In recent years as index funds have shot up in popularity, most of the major providers have introduced similar low-cost products (notably iShares, Fidelity, and Schwab). Vanguard has a long history of lowering their expense ratios as their assets under management grow, whereas the industry average hasn’t changed nearly as much ( source). the industry average over different time periods ( source): Here is an illustration from the Vanguard website comparing the Vanguard average expense ratio vs. These expenses are actually deducted daily in tiny increments from the funds’ net asset value (NAV), and while the numbers can seem small initially they will compound quietly and relentlessly over time. If you hold a steady $10,000 in a hypothetical fund with a 1% expense ratio, that would result in an annual charge of $100. When you invest in a mutual fund or ETF, the fund company charges you a fee called the annual net expense ratio. Vanguard Total International Bond (BNDX) at 0.07%.īackground.Vanguard Total US Bond Market (BND) at 0.03%.Vanguard Total International Stock Market (VXUS) at 0.07%.
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