Call it a late winter holiday present or maybe even an early Valentine's Day gift, but Vanguard gave its clients reason to smile this past Monday when it announced lower fees on 84 share classes of 53 funds. This includes exchange-traded funds (ETFs).
There are plenty of familiar names on Vanguard's latest lower expense ratio list, including the Vanguard High Dividend Yield ETF (VYM +2.04%). As of Feb. 3, this ETF had $72.2 billion in assets under management (AUM), making it the third-largest dividend ETF. Low fees are one reason this ETF is an investor favorite.
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Speaking of lower fees, the Vanguard High Dividend ETF is now charging investors just 0.04% annually, or a mere $4 on a $10,000 investment, down from 0.06%.
More than a symbolic gesture
For investors who have five or six figures of capital allocated to this Vanguard ETF, that fee cut undoubtedly makes them happy, but it's not a reason to throw a party. The $10,000 investor is saving $2 a year, or the cost of a Powerball ticket. However, that's not the context in which this expense ratio paring should be viewed.
Monday's news from Vanguard arrived nearly a year to the day after the asset manager announced reduced fees on 168 share classes of 87 funds. Add up the 2025 cost cuts with those unveiled earlier this week, including the one related to the high-dividend ETF, and Vanguard has passed on $600 million in savings to its clients over the past two years.
For shareholders of the high-dividend ETF wondering why it's worth getting excited about a couple of basis points in savings, consider the following. The least expensive ETFs often attract the most assets and specifically, Vanguard frequently lowers investors' costs as its funds grow in size.
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Key Data Points
The high dividend fund confirms as much. Already cheap to own entering last year, this ETF's 2025 asset-gathering tally was topped by just five other dividend ETFs. One of those was its stablemate, the Vanguard Dividend Appreciation ETF (VIG +1.78%). The issuer lowered the dividend appreciation ETF's expense ratio last year and this year, bringing it to 0.04% as well.
What investors get with this low-cost ETF
An ETF's expense ratio is just one part of the equation. A fund may be cheap to own, but if it's got an overly complex investment objective or subpar returns, the allure of the low fee is diminished. Fortunately, those aren't issues to worry about with the Vanguard High Dividend Yield ETF.
This ETF, which turns 20 years old in November, merits consideration as part of long-term buy-and-hold strategies for investors who don't want to constantly tinker with their portfolios. It holds 563 stocks, and its dividend yield of 2.32% is well above that of a pure beta broad-market fund, but not so high that shareholders have to worry about payout cuts or suspensions among the fund's holdings.
Actually, this Vanguard ETF does an admirable job of mixing reliable (healthcare, industrials), resurgent (financial services), and new (technology) sources of dividend growth, confirming that it's a potentially safer and definitely inexpensive idea for income investors.
