Live data from Hacker News

Vanguard's average fee is now 0.07% after biggest-ever cut

bloomberg.com

221–230 of 279 posts

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#221
post #163

Feels so strange that the average investor can't outperform an index fund with low management fees. A small investor is so agile - they can move in and out of positions. Why that agility can't be utilized to outperform a slow moving index fund, long-term?

All the easy alpha has already been taken by high-frequency traders and big trading firms, and once all the easy alpha is gone, you're left more-or-less just tracking general market behavior... just like index funds.

Except being more agile also means eating more fees.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#222
post #119

Earlier quoted context omitted.

PFOF isn't (typically) illegal, a better word might be "controversial". There's nothing free in this life: the zero commission brokers are making it up somehow. While the studies on how PFOF effects execution quality are varied, this summary [1] from Wharton seems fairly balanced. It's not as simple as citing NBBO and moving on. Personally I'm suspicious of the practice mostly because of the pretty clear conflicts of…

The zero commission brokers typically make most of their revenue on net interest margin. PFOF is a smaller portion.

securities lending doesn’t hurt if your clientele likes heavy short-interest-worthy meme stocks

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#223

Unless you have some super special edge, Vanguard is really good IMO. Having a 0.01% or 0.05% fund is really as good as you can do and never pay attention. Vanguard also has things like the VIGAX (0.05%) and the VITAX (0.09%) with excellent returns over the past 20 years. You could also actively invest, where you can get lucky, but if you have a day job... it gets tougher. edit: also you could do "better" with lower…

actively investing is 1) hard and 2) really just a waste of time considering the amounts most people are dealing with. I think it may have been from A Random Walk Down Wall Street but the general notion is something like this: You have a 500k portfolio, and you spend the average amount week managing your portfolio (12 hours). If you were to achieve a 2% alpha (which is considered insanely high for any actively manage…

The counter is smaller returns are easier for small investors. If you are a large investor just the act of buying stock changes the price.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#225

I wish there can be more focus on the voting rights for passive funds. Investors are concentrating voting power with these fund managers, just giving away their voting rights for free. I'd like to see better investor voting management systems become more available for "pass through" voting for passive fund investors. [1] https://vanderwalt.de/blog/etf-vs-direct-indexing-investing-...

It isn't possible to have an informed vote for the 500 companies in a S&P index fund and still have a life.

I probably have an informed opinion on the company I work for - but I don't have enough shares to matter. The other 499 I know nothing about.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#226

Earlier quoted context omitted.

With 7% interest it’s over 200k.

Sure but that’s an order of magnitude above the numbers the parent is comparing? A 7% fee is certainly crazy, agreed with you there

No. https://www.wolframalpha.com/input?i=500*sum+1.07%5Ex+from+0...

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#227

Earlier quoted context omitted.

I'd rather not have to "trust" any financial institution. https://www.cnbc.com/2025/01/17/vanguard-fined-more-than-100... https://asic.gov.au/about-asic/news-centre/find-a-media-rele... https://www.reuters.com/business/finance/vanguard-fined-prov...

You are likely to have to trust them eventually. SPIC insurance is $500,000. If you have more than that and it turns out instead of buying the investments you think they were a ponzi scheme that sent the money to the owners when it is discovered you get up to $500,000 of your money back, while the rest is your loss. You really should have more than that by age 40 if you want a comfortable retirement (that is todays d…

If you use a separate broker for each $500k then you only have to worry about multiple brokers catastrophically failing at the same time. And there are multiple types of account with each type having a separate $500k limit.

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#228

Earlier quoted context omitted.

Front running customer purchases is not the concern. In the running of an index fund there’s many levers you can pull to create revenue streams that don’t show up on expense ratios. Funny business can absolutely be pulled during rebalancing. Another big one is securities lending income. Vanguard pays that out to investors which effectively creates negative expense ratios in certain funds. Index funds from other issue…

I’m not disputing other funny business, I just don’t think they are making money front running passive index investors.

It's not about front-running investments _in_ passive index funds, it's about front-running investments _by_ passive index funds, which, of course, ultimately comes out of the investors' wallets.

As a practical matter, since dealing in mutual funds' shares is settled after market, "front running" these transactions would be problematic. (Impossible, I'd say?)

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#229
post #163

Feels so strange that the average investor can't outperform an index fund with low management fees. A small investor is so agile - they can move in and out of positions. Why that agility can't be utilized to outperform a slow moving index fund, long-term?

Agile is not something a small investor can win at. You can win by reading the 10k and such and then following what is happening in the real world and thus predict what will happen. You should be able to make a nice income doing this full time, but it won't be get rich, and probably won't be even tech levels. Note that I said full time. You will follow many companies and conclude the market is right and thus not do better, while what you need is the one where you can figure out in advance the company will do good/bad before the market does and thus buy/sell in advance.

Peter Lynch famously (he was then manager of the world's largest fund) got out of Gap when he noticed his daughters didn't buy anything there for school and that was his clue that they wouldn't do well next quarter. Gap as had ups and downs since. This is the type of research you will be doing all the time, trying to find a evidence of a company that will disappoint before anyone else knows. This is hard hard hard, and is always a matter of luck. Remember by the time it is public the large players already know and have acted (that is they get alerts the instant it becomes public and are first in line to act on it, technically you get the information at the same time and can act as fast but in practice you will not)

Re: Vanguard's average fee is now 0.07% after biggest-ever cut

#230

I'm a big fan of Vanguard, but if anyone is looking for competitively-priced funds from other issuers, check out - iShares Core (Blackrock) https://www.ishares.com/us/strategies/core-etfs - SPDR Portfolio (State Street) https://www.ssga.com/us/en/individual/fund-finder - Schwab Select (includes in-house and third-party) https://www.schwab.com/research/etfs/tools/select-list

Which of these do you use personally?

A mix. For a given asset class I look at expense ratios and underlying indexes.
Post reply on HN