What is the expense ratio for Vanguard ETF?
***Vanguard average ETF expense ratio: 0.05%. Industry average ETF expense ratio: 0.25%. All averages are asset-weighted.
A good rule of thumb is to not invest in any fund with an expense ratio higher than 1% since many ETFs have expense ratios that are much lower. Also, ETFs tend to be passively managed, which keeps the management fee low.
To keep costs low, Vanguard often uses a sampling strategy to construct its index funds using less than the total number of assets in an index. Vanguard offers funds that track a wide variety of market indices, large and small.
Vanguard's unique cost structure, the economies of scale it has achieved, and the total number of assets under management (AUM) allow it to offer its ETFs at the lowest cost available in the market. We've listed 10 of the firm's cheapest ETFs by their expense ratio.
VTI is a total U.S. market fund and holds more than 3,500 stocks. VTI is better diversified and benefits from small and mid-cap stocks that grow into large caps. VOO is less diversified, tracking the performance of the S&P 500 Index. VOO excludes small and mid-cap stocks.
A fund with a high expense ratio could cost you 10 times – maybe more – what you might otherwise pay. Typically, any expense ratio higher than one percent is high and should be avoided. Over an investing career, a low expense ratio could easily save you tens of thousands of dollars, if not more.
For example, Equity ETFs averaged 0.16% in 2021, down from 0.34% in 2009. Expense ratios of bond index ETFs averaged 0.12% in 2021, down from 0.26% in 2013. When evaluating ETFs, the lowest expense ratios are almost always preferred because many ETFs passively track the performance of an underlying benchmark.
Vanguard focuses more on passive options, and BlackRock offers a number of strategies. Vanguard and BlackRock both have unique and very different fee structures. Consider the fee structures, services, and investment options to make the best choice. A financial advisor can help you decide which option is best.
*Vanguard Target Retirement Funds average expense ratio: 0.08%. Industry average expense ratio for comparable target-date funds: 0.48%. All averages are asset-weighted. Industry averages exclude Vanguard.
If you look at individual options, you might beat Vanguard. But across the board, Vanguard is, I think, still the low-cost provider. Its U.S. average fund-weighted expense ratio is 8 basis points. By contrast, the industry average is 47 basis points.
Is Vanguard or Fidelity better for ETFs?
Both Fidelity and Vanguard have a wide variety of low-cost mutual funds and ETFs. If you're simply looking at the options offered by each firm, Fidelity has more options available.
Investors can buy and sell Vanguard mutual funds and ETFs through any number of brokerage firms and financial advisors. If you buy directly through Vanguard, you may benefit from lower fees, better customer service, and additional product research.
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.
Or, you could also invest in both, for example, by putting half in VOO and half in VTI. Here's a summary of which one to choose: If you want to own only the biggest and safest stocks, choose VOO. If you want more diversification and exposure to mid-caps and small-caps, choose VTI.
Vanguard S&P 500 ETF VOO is better diversified than QQQ, which leads to a more benign and predictable experience for investors. QQQ allocates half of its portfolio to technology stocks, higher than VOO's 30%, and SCHD's 12%.
Benefits of Vanguard Total Stock Market ETF (VTI)
VTI is an extremely diversified fund. Its large amount of holdings reflect the entire universe of investable U.S. securities. The fund has exposure to small-cap stocks which can be more volatile than mid- or large-cap holdings.
| Symbol | Name | Expense Ratio |
|---|---|---|
| SPLG | SPDR Portfolio S&P 500 ETF | 0.02% |
| BBUS | JPMorgan BetaBuilders U.S. Equity ETF | 0.02% |
| BND | Vanguard Total Bond Market ETF | 0.03% |
| AGG | iShares Core U.S. Aggregate Bond ETF | 0.03% |
Evaluate the ETF's Premium or Discount
If the ETF is trading at a premium, it could indicate that the ETF is overvalued. If it's trading at a discount, it could indicate that the ETF is undervalued.
High and Low Ratios
A good expense ratio, from the investor's viewpoint, is around 0.5% to 0.75% for an actively managed portfolio. An expense ratio greater than 1.5% is considered high.
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Which is the best ETF to invest now?
- Nippon India ETF Nifty 50 BeES. ₹ 241.63.
- Nippon India ETF PSU Bank BeES. ₹ 76.03.
- BHARAT 22 ETF. ₹ 96.10.
- Mirae Asset NYSE FANG+ ETF. ₹ 84.5.
- UTI S&P BSE Sensex ETF. ₹ 781.
- Nippon India ETF Gold BeES. ₹ 55.5.
- Nippon India Etf Nifty Bank Bees. ₹ 471.9.
- HDFC Nifty50 Value 20 ETF. ₹ 123.2.
For most individual investors, ETFs represent an ideal type of asset with which to build a diversified portfolio. In addition, ETFs tend to have much lower expense ratios compared to actively managed funds, can be more tax-efficient, and offer the option to immediately reinvest dividends.
Bottom Line. Overall, Vanguard and Fidelity are both great choices. They offer a wide range of investment options, low costs, and hands-off or active management depending on your preference. When it comes to index funds, Vanguard is hard to beat, with hundreds of low-cost options.
The Vanguard fund has a lower price-to-earnings ratio, at 17.4 times, compared with 18.3 for iShares. This is due to the lower weighting to the highly rated US market. Fees are comparable, with iShares costing 0.2% and Vanguard costing 0.22%.
| Holder | Shares | Date Reported |
|---|---|---|
| Blackrock Inc. | 2,153,238 | Dec 30, 2023 |
| Dimensional Fund Advisors LP | 2,004,886 | Dec 30, 2023 |
| Wellington Management Group, LLP | 1,685,126 | Dec 30, 2023 |
| Vanguard Group Inc | 1,601,091 | Dec 30, 2023 |
