Low-Cost Vanguard Attracts Billions in Assets

Vanguard, one of the world’s largest mutual fund companies, also has carved out a strong niche as a provider of exchange-traded funds (ETFs) that fit the investment firm’s focus on keeping its management expenses low.

In 2013, Vanguard’s funds incurred an average expense ratio of 0.19%, compared to the industry average expense ratio of 1.08%, according to Lipper, which provides fund information and analysis. A low expense ratio has been a hallmark of Vanguard funds since the company’s launch in 1975.

Vanguard’s ETFs actually are regarded within the investment company as a share class of its mutual funds. Those ETFs combine the benefits of low cost and diversification provided by investing in indexes, along with the opportunity to know the share price at a given moment before selling shares. In contrast, a mutual fund prices its shares at the end of the trading day, and an investor is forced to accept that sale price without knowing it when the sell order is placed.

Read more about Vanguard and its low-cost ETFs at Eagle Daily Investor.