Expense Ratios Dip for Sector SPDRs and Vanguard ETFs

ETFguide

The annual expenses for owning ETFs is decreasing, as companies from State Street Global Advisors to Vanguard, slash fees.

The nine Select Sector SPDRs, which slice the S&P 500 by industry sectors, cut annual expense ratios from 0.20 percent to 0.18 percent.

'The economy notwithstanding, 2011 was a banner year for us, both in terms of the increase in our average assets and the growth in our overall year-end assets,' said Dan Dolan, Director of Wealth Management Strategies for the Select Sector SPDR Trust.

The average monthly assets in the Sector SPDRs increased by 32 percent and are currently around $44 billion.   

'With the markets especially choppy last year, investors sought safe havens in defensive sectors like Utilities (NYSEArca: XLU - News), Consumer Staples (NYSEArca: XLP - News), and Health Care (NYSEArca: XLV - News), using the Select Sector SPDRs as equity substitutes to reduce single stock exposure.'

Launched in 1998, Select Sector SPDRs is the oldest brand name in sector ETFs and the funds average weekly trading volume of approximately one billion shares

Vanguard Cuts Expenses on 19 ETFs

Vanguard filed annual prospectus updates last month. The fund giant cut expenses for 19 ETFs while eight ETFs had modest increases.

Bond ETFs like the Vanguard Short-Term Corporate Bond Fund (NYSEArca: VCSH - News), Intermediate-Term Corporate Bond Fund (NYSEArca: VCIT - News) and the Long-Term Corporate Bond Fund (NYSEArca: VCLT - News) had annual fee cuts from 0.15% to 0.14%.

For those ETFs where expense ratios increased, it was due to 'acquired fund fees and expenses' (AFFE) that result from ownership of business development companies (BDCs).

Although the SEC requires that BDC costs be included in a fund's expense ratio, these fees are not incurred by the fund. They have no impact on a fund's total return or on its tracking error relative to an index. The financial statements in each fund's annual or semiannual report provide an annualized calculation of the fund's actual expenses for the period, a more accurate tally of the operating costs incurred by shareholders. Several Vanguard ETFs own shares of BDCs because the BDCs are included in the ETFs' target indexes.

Vanguard ETF

Ticker

Old Expense Ratio

New Expense Ratio

S&P Mid-Cap 400

IVOO

0.16%

0.17%

S&P Mid-Cap 400

IVOV

0.21%

0.24%

S&P Small-Cap 600

VIOO

0.15%

0.16%

S&P Small-Cap 600 Value

VIOV

0.20%

0.22%

Russell 1000 Value

VONV

0.15%

0.16%

Russell 2000

VTWO

0.19%

0.22%

Russell 2000 Value

VTWV

0.27%

0.33%

Russell 3000

VTHR

0.15%

0.16%

Mega Cap 300

MGC

0.13%

0.12%

Mega Cap 300 Growth

MGK

0.13%

0.12%

Mega Cap 300

MGV

0.13%

0.12%

Short-Term Corporate Bond

VCSH

0.15%

0.14%

Short-Term Government Bond

VGSH

0.15%

0.14%

Intermediate-Term Corporate Bond

VCIT

0.15%

0.14%

Intermediate-Term Government Bond

VGLT

0.15%

0.14%

Long-Term Corporate Bond

VCLT

0.15%

0.14%

Long-Term Government Bond

VGLT

0.15%

0.14%

Consumer Discretionary

VCR

0.24%

0.19%

Consumer Staples

VDC

0.24%

0.19%

Energy

VDE

0.24%

0.19%

Financials

VFH

0.27%

0.23%

Health Care

VHT

0.24%

0.19%

Industrials

VIS

0.24%

0.19%

Information Technology

VGT

0.24%

0.19%

Materials

VAW

0.24%

0.19%

Telecommunications Services

VOX

0.24%

0.19%

Utilities

VPU

0.24%

0.19%



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