Vanguard has trimmed the management fee on its Toronto-listed Vanguard FTSE Global All Cap ex Canada Index ETF (VXC CN) from 0.25% to 0.20%.
Kathy Bock, Head of Vanguard Investments Canada.
The fund provides exposure to stocks from developed and emerging markets, excluding Canada, by tracking the FTSE Global All Cap ex Canada China A Inclusion Index.
The market-capitalization-weighted index covers large-, mid-, and small-cap companies and includes China A-share securities adjusted for the aggregate approved QFII and RQFII quotas available to international investors.
The ETF is home to approximately C$860 million in assets under management, meaning the fee reduction will save existing investors around C$430,000 annually.
Kathy Bock, Head of Vanguard Investments Canada, commented, “Vanguard has a long history of lowering investing costs in the areas in which we operate and we are pleased to reduce the fees in one of our largest equity ETFs.
“One of the biggest myths with investing is that high costs lead to better returns. In fact, it’s the opposite. Every dollar paid in extra fees is a dollar taken away from investor returns and this compounds over time.”
The fee cut aligns the fund’s management fee with its closest competitor, the C$1.1 billion iShares Core MSCI All Country World ex Canada Index ETF (XAW CN). This fund also provides global ex-Canada equity exposure by tracking the MSCI ACWI ex Canada Index. Its management expense ratio (MER) is also 0.20%.
According to Vanguard, MERs are updated on an annual basis so the recent price change for VXC won’t be reflected in its MER until early next year; however, Vanguard has sought to reduce the fund’s total cost of ownership by simplifying the structure to remove a second layer of taxation with a lower withholding rate.
“This total fee reduction continues our trend of passing on cost-savings to investors, following fee reductions in 2013, 2014, 2015, and 2018,” added Bock.
According to Vanguard, the asset-weighted management expense ratio for Vanguard ETFs in Canada is 0.14%, compared to the overall ETF asset-weighted industry average of 0.31%.