Vanguard has announced fee reductions to 168 share classes in 87 funds as of Feb. 1, 2025. These reductions are expected to yield more than $350 million in year-one savings for investors and keep lowering the cost of investing.
Vanguard’s Investment Philosophy
Cost efficiency is a key component of investment success by Vanguard. The firm was founded by John C. Bogle in 1975 and its structure enables it to pass on cost savings to investors. This approach is based on the idea that minimizing expenses can enhance long-term returns.
Fee Reductions and Their Impact
The latest reductions include lowering the expense ratios on actively managed fixed-income and money market funds. According to Vanguard, these changes will lead to huge savings for investors. This is because low fees mean that investors keep more of the returns and fund managers do not have to expose investors to too much risk to make up for high fees.
Low-Cost Funds’ Performance
The low-cost funds outperform their high-cost counterparts on a net expense basis. For the past 10 years, till Dec. 31, 2024, 84% of Vanguard's funds outperformed the average returns of competing funds, while 91% of its actively managed bond funds and all of its money market funds outperformed their peer groups.
We have chosen three Vanguard mutual funds — Vanguard Explorer Value Fund VEVFX, Vanguard Equity Income Fund VEIPX and Vanguard US Growth Investor VWUSX — that investors should buy now for the long term. These funds have a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy), positive three-year and five-year annualized returns, minimum initial investments within $5000 and expense ratios considerably lower than the category average. So, these funds have provided a comparatively stronger performance and carry a lower fee.
Vanguard Explorer Value Fund invests in small-cap domestic equity securities that it considers undervalued. VEVFX selects securities that have above-average dividend yields.
William A. Teichner has been the lead manager of VEVFX since March 30, 2010. Most of the fund's holdings were in companies like Adtalem Global Education Inc. (1.8%) Royal Caribbean Group (1.6%) and OneSpaWorld Holdings Limited (1.6%) as of Nov. 30, 2024.
VEVFX's 3-year and 5-year annualized returns are 6.9% and 10.2%, respectively. Its net expense ratio is 0.49% compared to the category average of 1.01%. VEVFX has a Zacks Mutual Fund Rank #1.
To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.
Vanguard Equity Income Fund invests primarily in common stocks of mid and large-cap companies that generate decent dividend income and are, in the opinion of the fund advisor, undervalued relative to similar stocks.
Matthew C. Hand has been the lead manager of VEIPX since Oct. 5, 2021. Most of the fund's holdings were in companies like JPMorgan Chase & Co. (3.8%) Broadcom Inc (3.5%) and Johnson & Johnson (2.8%) as of Sept. 30, 2024.
VEIPX's 3-year and 5-year annualized returns are 8.9% and 11.2%, respectively. Its net expense ratio is 0.27% compared to the category average of 0.90%. VEIPX has a Zacks Mutual Fund Rank #1.
Vanguard US Growth Investor invests primarily in common stocks of large-cap companies with strong earnings growth potential.
Andrew J. Shilling has been the lead manager of VWUSX since Oct. 7, 2010. Most of the fund's holdings were in companies like NVIDIA Corp (9.7%) Amazon.com, Inc. (8%) and Microsoft Corp (7.7%) as of Nov. 30, 2024.
VWUSX's 3-year and 5-year annualized returns are 11.3% and 15.5%, respectively. Its net expense ratio is 0.32% compared to the category average of 0.99%. VWUSX has a Zacks Mutual Fund Rank #1.
Want key mutual fund info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>
Only $1 to See All Zacks' Buys and Sells
We're not kidding.
Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.
Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.
See Stocks Now >>Get Your Free (VWUSX): Fund Analysis Report
Get Your Free (VEIPX): Fund Analysis Report
Get Your Free (VEVFX): Fund Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
