Vanguard cuts fees on $81.4 billion bond ETF

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Vanguard slashed fees for its $81.4 billion Total Bond Market ETF by half a basis point, as part of a set of tweaks that saw lower fees for four exchange-traded funds and one increased costs for two mutual funds.

Fees for the Vanguard Total Bond Market ETF were cut by half a basis point, from 3.5 basis points to 3 basis points, according to a company statement.

The $382 million Vanguard Market Neutral Fund, the smallest of its funds, saw the largest basis point increase, from 118 basis points to 131, in its investor stock category. The fund’s institutional share class also rose from 112 bps to 125 bps.

The four ETFs are all bond products: the Total Bond Market ETF; the $36.5 billion short-term bond ETF; the $13.1 billion mid-term bond ETF; and the $4.6 billion long-term bond ETF.

In late August, Vanguard cut fees for 17 funds, including nine fixed-income ETFs

This article was previously published by Ignites, a title owned by the FT Group.

In total, the six funds and ETFs, which collectively have more than $137 billion in assets under management, added $25.6 billion in the 12 months ending March 31, according to data from Morningstar Direct.

The Total Market Bond ETF saw the largest inflows of $17.6 billion over the 12-month period, while the Managed Allocation Fund added just $4 million.

The $1.3 billion Managed Allocation Fund’s expense ratio rose 3 basis points to 31 basis points.

Expense ratios change for a variety of reasons, a Vanguard spokesperson said in a statement, such as asset growth and operational efficiency. He declined to comment further on specific changes to the fees for these funds.

“For funds that use both long and short sell strategies, such as the Vanguard Market Neutral Fund, expense ratios may include borrowing expenses and dividend expenses on securities sold short,” the report says. communicated.

Many fund stores began reallocating their fixed income assets to short-term bonds ahead of the U.S. Federal Reserve’s interest rate hike in March. Future interest rate hikes could depress the value of fixed-income funds with long-term exposure, the Fed warned in March. The central bank announced that it would raise rates six more times this year.

In late August, Vanguard cut fees for 17 funds, including nine fixed-income ETFs, totaling $243.5 billion in assets, the company announced in December.

*Ignites is an information service published by FT Specialist for professionals working in the asset management industry. It covers everything from new product launches to regulations and industry trends. Trials and subscriptions are available at enflamme.com.

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