Vanguard's Fee Cut Shocker: A Major Threat Or Just Noise For BlackRock?

Vanguard created a buzz through the asset management industry when it decided to cut fees.

For BlackRock Inc (NYSE:BLK), Vanguard's closest competitor in the ETF space, the move might not be as big a deal as it initially seemed.

What Happened: Asset manager Vanguard slashed expense ratios for 168 share classes across 87 mutual funds and ETFs. This brings its asset-weighted average fee down to as low as it can get, at 0.07%.

With $10 trillion in assets under management (AUM), Vanguard's aggressive cost-cutting is a stark contrast to the industry's 0.44% average fee, according to Bloomberg.

This is the largest fee reduction Vanguard has ever undertaken, and it reiterates its reputation as the industry's low-cost leader. The race to offer the cheapest index funds led Vanguard to scoop up a near-record $305 billion in ETF inflows in 2024 alone.

Also Read: Vanguard’s S&P 500 ETF Hits $100 Billion Inflows In 2024: Is SPY’s Crown At Risk?

Despite Vanguard's aggressive move, BlackRock likely isn't sweating too much.

Why Not? Pricing pressure is nothing new, according to a recent JPMorgan research note. Both Vanguard and BlackRock regularly cut ETF fees, reinvesting their benefits of scale into lower costs for customers.

"Since 1975, Vanguard has ...

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