Vanguard cut expense ratios on 87 of its mutual fund and ETF share classes on Tuesday, the deepest single round of fee reductions since 2023. Analysts expect the move will force a response from BlackRock and State Street.
The average cut was roughly 2 basis points, but several flagship products, including Vanguard's Total Stock Market and Total International Stock ETFs, saw larger reductions.
Why now
Vanguard operates on an at-cost structure, meaning fee cuts are mechanical once scale delivers lower per-unit costs rather than a discretionary pricing decision. Still, the timing lands squarely in a period of intensifying competition from zero-fee entrants.
Combined assets across the cut funds exceed $2.3 trillion, meaning the reduction removes hundreds of millions of dollars in aggregate annual fee revenue from the industry.