Forge, Pa.-based Vanguard will end with funds that cost investors 0.19 percent, down from their current levels of 0.24 percent. That means they will be cheaper than most of the sector funds SSgA has had so much success marketing in recent years. Those ETFs sponsored by Boston-based State Street mostly cost 0.20 percent.

One notable exception is that the 4-basis-point, 15 percent, decrease in the annual cost of its Vanguard Financials ETF (NYSEArca:VFH - News) won’t be enough for the fund to beat out SSgA’s huge Financials Select Sector Fund (NYSEArca:XLF - News). XLF, a $5 billion fund, has an annual expense ratio of 0.20 percent – again like most SSgA sector funds. Vanguard’s VFH, meanwhile, will have a total expense ratio of 0.23 percent.

Vanguard officials weren’t immediately available to comment on the filing, but it’s doubtful they would offer up anything different than what they usually do when asked about fees. Unlike Schwab, which is unfailingly explicit about its strategic aim of competing on price, Vanguard is loathe to frame its low-cost ETFs in such terms, emphasizing instead that its mutual structure requires it to run funds at cost.

More specifically, the growth of funds allows the company to spread the mostly fixed costs of running a given fund across a bigger base of fund holders, which, in turn, allows the fund sponsor to lower costs for each investor in its funds.

Indeed, a look at fund flows data compiled by IndexUniverse shows that the Vanguard funds in question have, for the most part, been hauling in fresh assets in the past few years, even if roiled financial markets have lowered their assets. Vanguard, the No. 3 U.S. ETF firm by assets, led all firms in ETF asset gathering in 2010 , and has mostly been at the top of monthly league tables this year too.

It wasn’t immediately clear when the regulatory filing would take effect, or if the new prices are already in effect. Vanguard made the filing with the Securities and Exchange Commission on Tuesday, Dec. 20.

Calls to Vanguard seeking comment weren’t immediately returned.

The Proposed Price Cuts

• Vanguard Consumer Discretionary ETF (NYSEArca:VCR - News) now costs 0.24 percent and the filing stipulates a new cost of 0.19 percent
• Vanguard Consumer Staples ETF (NYSEArca:VDC - News) now costs 0.24 percent and the filing stipulated at new cost of 0.19 percent
• Vanguard Energy ETF (NYSEArca:VDE - News) now costs 0.24 percent and the filing stipulates a new cost of 0.19 percent.
• Vanguard Financials ETF (NYSEArca:VFH - News) now costs 0.27 percent and the filing stipulated a new cost of 0.23 percent. Again SSgA’s XLF costs just 0.20 percent a year
• Vanguard Health Care ETF (NYSEArca:VHT - News) now costs 0.24 percent and the filing stipulates a new cost of 0.19 percent
• Vanguard Industrials ETF (NYSEArca:VIS - News) now costs 0.24 percent and the filing stipulates a new cost of 0.19 percent
• Vanguard Information Technology ETF (NYSEArca:VGT - News) now costs 0.24 percent and the filing stipulates a new cost of 0.19 percent.
• Vanguard Materials ETF (NYSEArca:VAW - News) now costs 0.24 percent and the filing stipulates a new cost of 0.19 percent
• Vanguard Telecommunication Services ETF (NYSEArca:VOX - News) now costs 0.24 percent and the filing stipulates a new cost of 0.19 percent.
• Vanguard Utilities ETF (NYSEArca:VPU - News) now costs 0.24 percent and the filing stipulates a new cost of 0.19 percent.

The existing expense ratios were all posted on Vanguard’s website as of Friday, Dec. 23.

Again, most of SSgA’s sector funds, like XLF, have annual expense ratios of 0.20 percent, according to State Street’s website.

 

 

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