Vanguard, the brokerage company that gave the world its first passive index fund in 1976, has been a low cost leader for over forty years. The firm has been known to have the lowest cost passive index funds, but recent moves by Fidelity and Schwab actually undercut Vanguard’s fees on a few popular funds.
The move makes Vanguard’s funds equal to or cheaper than Fidelity’s, but not quite as low as Schwab’s on the Total Stock Market, Total International, and Total Bond Funds.
Schwab: – Total Stock Market (SWTSX) 0.030 – Total International Market (SWISX) 0.060 – Total Bond Market (SWAGX) 0.040 – Cost per $1 Million per year (1/3 in each fund): $433
Fidelity (ZERO Expense Ratio Funds): – ZERO Total Market Index Fund (FZROX) 0.000 – ZERO International Index Fund (FZILX) 0.000 – US Bond Index (FXNAX) 0.025 – Cost per $1 Million per year (1/3 in each fund): $83
Fidelity and Charles Schwab are now the leaders when it comes to ultra low cost investing. They have seen the money pouring into Vanguard and have made a move to capture some of those dollars. It’s an intelligent tactic.
I’m happy to stick with Vanguard, but I was starting from nothing today, I would certainly consider investing in an ultra-low-cost three fund portfolio via Schwab.