Vanguard has adjusted its fee structure for select mutual funds and ETFs, marking a strategic shift from its historically lowest-cost offerings. The changes, affecting over 30 funds, signal a response to rising operational expenses and intensifying competition in the asset management space.
- Vanguard raised fees on 32 mutual funds and ETFs, including VTSAX, from 0.03% to 0.05%
- Institutional versions of funds now charge 0.04% for assets over $500 million
- Average U.S. equity fund expense ratio increased to 0.06% in 2026
- Changes mark first fee adjustment since 2015 and signal departure from rock-bottom pricing
- Competitors like BlackRock and Fidelity maintain fees below 0.05% for comparable products
- Fee increases reflect rising operational costs and long-term sustainability pressures
Vanguard has implemented modest fee increases across a subset of its mutual funds and exchange-traded funds, the first such adjustments since 2015. The changes, effective January 1, 2026, apply to 32 funds, including several large-cap equity and fixed-income products. The most notable increase is a rise from 0.03% to 0.05% in the expense ratio for Vanguard Total Stock Market Index Fund (VTSAX), a cornerstone holding for millions of investors. The move reflects growing pressure on fund managers to cover escalating operational costs, including compliance, technology, and personnel expenses. While Vanguard has long been the gold standard for low-cost investing, the new fee levels—though still significantly below industry averages—mark a departure from its legacy of near-zero fees. The firm also introduced tiered fee structures for institutional versions of certain funds, with assets above $500 million subject to a 0.04% fee, up from 0.02%. Industry analysts note that Vanguard’s adjustments are likely a precursor to broader changes, particularly as active management and ESG-focused funds incur higher administrative costs. The average expense ratio across Vanguard’s U.S. equity mutual funds now stands at 0.06%, up from 0.04% in 2023. These changes could impact long-term investor returns, especially for those with large allocations to Vanguard’s core funds. The shift may also influence competitive dynamics. BlackRock, State Street, and Fidelity have maintained fees below 0.05% for similar index products, but the increased transparency around cost structures could prompt further fee rationalization across the industry. Retail investors and financial advisors are likely to reevaluate portfolio allocations in response.