Vanguard, long considered the king of low-cost indexing, has lost its throne–for the time being. In what must be a vexing twist for the Malvern, Pa., fund firm, which has long trumpeted the importance of low fees, the crown for the lowest-cost index funds now belongs to Schwab.
But let’s keep things in perspective. In some cases, the Schwab index mutual funds and exchange-traded funds we’re talking about undercut their Vanguard counterparts by just 0.01 percentage point. In dollar terms, says John Woerth, a Vanguard spokesman, that amounts to $1 in savings on a $10,000 investment. In other words, not a whole lot. It boils down to “the diminishing value of de minimis differences in expense ratios,” he says. By assets, Vanguard, with $4 trillion under management, still rules. (Schwab has $2.5 trillion in assets under management.)
Schwab’s index mutual funds have another advantage: no investment minimum. The firm did away with the investment minimum requirement for many of its index mutual funds in March. The entry-level Investor share class of Vanguard funds, by contrast, requires an initial outlay of $3,000; the lower-cost Admiral share class at Vanguard calls for $10,000.
Here is a closer look at half a dozen Schwab funds and ETFs in five different categories. Each fund is less expensive than the comparable Vanguard offering, regardless of mutual fund share class.
Prices and data are through July 13. Click on ticker-symbol links in each slide for current prices and more.