ETFs, Investments

Vanguard drops bond ETF fee

Vanguard ETF Management fee Reduction Vanguard Australian Government Bond Index ETF

The yearly fee associated with one of Vanguard’s most popular ETF products has been cut by several basis points.

Vanguard Australia has reduced the fee for one of its most popular exchange-traded funds (ETF) available on the Australian Securities Exchange (ASX).

The investment manager has decreased the fee charged for the Vanguard Australian Government Bond Index ETF (ASX: VGB) by four basis points, with the cost to the client for investing in the fund now levied at 0.16 per cent a year.

Vanguard Australia head of product offer Curt Jacques said the reduction was made as part of the firm’s commitment to keeping management costs low.

“Vanguard is focused on delivering value to investors through lower fees, high-quality experience and best-in-class investment management. We’ve been pleased to be able to achieve more than 40 fee reductions for our Australian investors in the past decade across our range of products and services,” Jacques noted.

“This fee change may be good news for investors seeking to move out of cash holdings to capture low-cost, durable, resilient yields, with the potential for additional price appreciation as rates eventually decline.

“Following the Reserve Bank of Australia keeping rates on hold last week and removing their tightening bias, our outlook for bonds remains positive and we expect interest rates to ultimately settle at levels above those in recent memory.”

Data released by the ASX and Vanguard earlier this year revealed bond ETFs have become increasingly popular among investors as rising interest rates have made fixed income allocations more attractive, with Australian bond ETFs experiencing a 37 per cent uptick in 2023 when compared to the year before.

The reduction comes after Vanguard Australia lowered the fees charged on its Australian Fixed Income Index ETF and Australian Shares Index ETF last year.

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