Vanguard cuts costs on fixed-interest funds

Vanguard has confirmed it is lowering the cost of fees on its Australian Fixed Interest Fund and Exchange Traded Fund (ETF) from 0.24 per cent to 0.19 per cent and 0.20 per cent to 0.15 per cent, respectively. Simultaneously, fees on the Vanguard Australian Corporate Fixed Interest Index Fund will also be reduced from 0.29 per cent to 0.24 per cent and the ETF from 0.26 per cent to 0.20 per cent.

“Keeping costs low on our broadly diversified funds is one of the many ways we continue to support Australian investors to achieve their financial goals,” said Evan Reedman, Vanguard Australia’s head of product.

“We are pleased to pass on cost savings to our investors as the growth and maturity of our funds continues to drive efficiencies of scale.”

Acknowledging doubts posed by some investors regarding the role of bonds in a long-term financial plan given persistently low yields, Mr Reedman stressed their key function: security.

“As a defensive asset, bonds serve to cushion an investment portfolio and can help smooth out an otherwise anxiety-inducing ride during periods of market volatility,” said Mr Reedman.

“And if there is one lesson to be learnt from the last 18 months, it is that uncertainty-induced volatility is here to stay.

“For advisers, having lower-cost, high-quality, fixed-interest choices available in this environment is critical to ensure they can continue to harness the critical role of bonds and effectively diversify client portfolios.”

The fee reductions will take effect on 1 October 2021.

As of 31 August, Vanguard had over AU$11.3 trillion in assets under management globally, including more than AU$2.8 trillion in ETFs.