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Vanguard drops ETF fees

Vanguard Australia has reduced the fee for one of its most popular exchange-traded funds (ETF), as well as dropping the costs associated with a few of its managed indexed funds.

The investment manager has decreased the fee charged for the Vanguard Australian Shares Index ETF by four basis points, with the cost to the client for investing in the fund now levied at 0.1 per cent a year.

The latest move comes after Vanguard Australia lowered the fees charged on its US Total Market Shares Index ETF and All-World ex-US Shares Index ETF earlier this year.

The ability for Vanguard Australia to reduce the investment costs for its customers has resulted from a combination of economies of scale achieved for both its local and global offerings and the manager’s US mutual ownership structure.

“Vanguard takes a lot of pride in being able to pass along the benefits of increasing scale in our funds and driving costs down over time for our investors, it is in the DNA of our organisation and it is something we will continue to focus on across our full product suite,” Vanguard head of product and marketing Evan Reedman said.

“We welcome recent announcements from other product issuers who are also moving to lower costs as it is one of the most controllable aspects of investing.

“While some issuers may offer lower prices on select products, Vanguard is committed to delivering high value and low cost across our broad range.”

Three managed funds operating under the Vanguard umbrella also experienced a reduction in fees. Clients of the Vanguard Australian Shares Index Fund will now be charged a yearly fee of 0.16 per cent, representing a drop of two basis points.

Similarly, the Vanguard Australian Shares High Yield Index Fund fee was lowered by three basis points to 0.35 per cent a year, while the Vanguard Australian Government Bond Index Fund had a five-basis-point cut to its fee, now standing at 0.24 per cent a year.

The reduction in fees comes just over a year after fellow ETF provider BetaShares launched its Australia 200 fund, offering access to the 200 largest stocks listed on the Australian Securities Exchange, with a record low yearly fee of 0.07 per cent.

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