With reduced fees, these two Vanguard ETFs look even better

Key points

• Vanguard just lowered the fees on 168 share classes of its funds and ETFs.

• It was the largest fee reduction in the companyʻs history.

• Two excellent Vanguard ETFs were among those that saw their fees reduced.

Vanguard just implemented its largest fee cut ever.

The Vanguard Group, the second largest manager of exchange-traded funds (ETFs), is a pioneer in the asset management business. It was the first company to create an index mutual fund when founder John Bogle did it in 1975.

He was also a champion of low fees on mutual funds, and Vanguard has been known for its low fund fees ever since.

“In investing, realize that you get what you don’t pay for,” Bogle, who died in 2019, once said. “Whatever future returns the markets are generous enough to deliver, few investors will succeed in capturing 100% of those returns, simply because of the high costs of investing—all those commissions, management fees, investment expenses, yes, even taxes—so pare them to the bone.”

Vanguard has heeded that advice for 50 years as its low-fee strategy has allowed Vanguard to become one of the largest money managers in the world.

Last week, it pared the fees even closer to the bone. The firm launched its largest fee reduction ever, reducing the expense ratios on 168 share classes of its funds, saving investors a total of $350 million this year alone.

But beyond the savings, when expense ratios are lower, investment returns are generally higher, as fees come out of returns. So, some of the already lowest fees in the business just got even lower. Here are two Vanguard ETFs in particular that look even better right now.

Vanguard information technology ETF

With some $100 billion in assets under management, the Vanguard Information Technology ETF (NYSEARCA:VGT) is the second largest technology sector ETF and one of the top performers.

Over the past 10 years, it has posted an average annualized return of 21.1%. Over the past five years, the ETF has an average annualized return of 20.4%, and over the past one-year it is up 25.6%.

This ETF, which tracks the MSCI US IMI 25/50 Information Technology Index, is broader than many of its competitors, holding 316 stocks of various cap sizes witha focus on stocks that serve the computer and electronics industries. Its top three holdings are Apple (NASDAQ:AAPL), NVIDIA (NASDAQ:NVDA), and Microsoft (NASDAQ:MSFT).

It was among the ETFs that saw its expense ratios lowered as Vanguard dropped it to 0.09% from 0.10%. One of its primary competitors, the Technology Select Sector SPDR Fund (NYSEARCA:XLK), also dropped its expense ratio from 0.09% to 0.08%, matching the Fidelity MSCI Information Technology Index ETF (NYSEARCA:FTEC) at 0.08%.

The three are well below the average for technology ETFs as they compete for market share.

Vanguard dividend appreciation ETF

Another ETF that saw its expense ratio decrease is the Vanguard Dividend Appreciation ETF (NYSEARCA:VIG).

This ETF tracks the S&P U.S. Dividend Growers Index, which includes mostly large-cap stocks with a history of growing their dividends year after year.

In a choppy and volatile market like we are expected to have in 2025, this ETF of stable growers should be in higher demand. In addition, the dividend income it generates will boost its total return if the dividends are invested back into the fund.

The Vanguard Dividend Appreciation ETF has posted solid returns over the years, with an average annualized return of 12.1% over the past 10 years. Its five-year average annualized return is also 12.1% and it has returned 19.3% over the past one year.

The portfolio holds 337 stocks with Broadcom (NASDAQ:AVGO), Apple, and Microsoft the three largest positions. But then the next three are more traditional value stocks, including JPMorgan Chase (NYSE:JPM), Visa (NYSE:V), and Exxon-Mobil (NYSE:XOM).

Vanguard reduced the expense ratio for this ETF from a miniscule 0.6% to an even lower 0.5%.

An investment in these two excellent ETFs is a win-win, as you are paying even lower fees and potentially higher returns.