Vanguard reduces cost of investing for five funds

Vanguard has lowered the cost of investing in Australia, announcing reductions to the management expense ratios (MERs) on five of its funds from 1 October.

The fund manager said that it had decided to drive down investing costs for its clients in Australia after it had first reduced the cost of investing with its mutual structure in the US.

The MERs reductions would apply to Vanguard's three wholesale managed funds and two exchange-traded funds (ETFs) and would see a drop in MERs by 0.02 per cent for Vanguard Australian Shares High Yield Fund, Vanguard International Credit Securities Index Fund (hedged) and for Vanguard Australian Property Securities Index ETF. At the same time, an MER reduction of 0.01 per cent would apply to Vanguard Australian Property Securities Index Fund and Vanguard Australian Shares Index ETF.

Vanguard Australia head of product, Evan Reedman, said: "For Vanguard, low-cost isn't a marketing strategy that we apply to select funds. It is in our DNA, it is how we do business.

"Some people may look at these reductions and question how one or two basis points off already low expense rations can possibly have an impact.

"But every basis point in costs counts, and over the long-term, the compounding benefits of these lower costs can meaningfully improve outcomes for investors.

"We absolutely believe in the power low-cost investing has in letting investors keep more of their returns."