Vanguard Group, an investment management company, has released a fee reduction to 0.07 percent, in comparison to the industry average of 0.44 percent. This cut is expected to save investors more than $350 million, according to Vanguard news.
This cut, while beneficial for investors, puts competitors BlackRock and Invesco in difficult positions. Vanguard’s fund investors elect its board members; therefore, they own the company, according to Bloomberg News. This means that Vanguard is not able to maintain its margins as much as Invesco and BlackRock are.
Vanguard’s fee reduction largely focuses on benefiting its constituents and attracting new clients. Other firms, such as JPMorgan, are managing this competition by focusing on high-margin areas.
