Vanguard Has Met Its Match on Fees

Two asset managers stand atop the rest when it comes to low-cost lineups. The race to the bottom has turned into a two-horse race with Vanguard and Schwab matching each other blow for blow with fee cuts and low-cost launches. Here’s how it went down:

• July 2023: Schwab launches lowest-cost high-yield bond ETF
• September 2023: Schwab prices entire fixed-income ETF lineup at 0.03%
• November 2024: Schwab launches lowest-cost mortgage-based securities ETF
• February 2025: Vanguard cuts fees on 87 funds by 0.01% on average
• June 2025: Schwab cuts fees on four stock ETFs by 0.03% on average
• February 2026: Vanguard cuts fees on 53 funds by 0.01% on average
• June 2026: Schwab cuts fees on four more stock ETFs

These moves, and heavy inflows into cheap funds, had investors paying just $7 for every $10,000 invested, or 0.07%, for Vanguard and Schwab funds on average by the end of 2025. Fee cuts and low-cost launches are just part of the story, though.

Asset-weighted average fees give an accurate picture of what investors pay since the largest funds weigh most heavily in the calculation. It’s clear across the fund landscape, and these two firms, that investors overwhelmingly prefer low-cost funds, driving asset-weighted average costs down across the board.

We estimate investors saved nearly $6.8 billion in fund expenses last year, largely because of this.

Schwab and Vanguard continue to collect substantial inflows, too, thanks to their low-cost lineups, steadily bringing their asset-weighted average fee down over the past decade. Vanguard enjoyed the most inflows of any fund family between 2023 and 2025, with Schwab in sixth; this, despite ranking outside the top 10 by assets at the beginning of 2023.

Investors Favor Low-Cost ETFs From Vanguard and Schwab

The tables below show which funds investors bought the most across the two firms between 2023 and 2025.

All 10 of these funds are index-tracking, and all charge less than 0.07%—each firm’s asset-weighted average fee.

Passive funds across the entire US fund landscape have collected the vast majority of flows over the past several years. Active exchange-traded funds are making inroads, but the inertia of passive funds will be hard to slow down and likely impossible to reverse.

Can Vanguard and Schwab Get Any Cheaper?

Margins are probably slim in Malvern and Westlake, with many Vanguard and Schwab index funds already charging just 0.03% or less. This means substantial fee cuts are unlikely, and future reductions may be more symbolic than anything. However, inflows into cheap funds can continue and likely will.

The cheapest 5% of US funds collected nearly 4 times the inflows of the next 5% over the past 10 years. Not only do investors prefer cheap funds. They prefer the cheapest of the cheap.

It’s still possible for average expenses to tick lower if inflows continue. Most of Vanguard and Schwab’s largest funds charge less than 0.07%.