Vanguard Fund Costs Rise as Stocks Drop

Vanguard Group recently raised fees on some of its mutual funds. The expense ratio for the Intermediate-Term Tax Exempt Fund(VWITX Quote) climbed to 0.2% from 0.15%. It rose to 0.46% from 0.37% on the U.S. Value Fund(VUVLX Quote).

The news shocked some shareholders because Vanguard has always been viewed as a low-cost mutual fund manager. Has Vanguard changed its philosophy? Hardly.

The rising costs are a symptom of a weak stock market that has lowered Vanguard assets by $300 billion in the past year to $1.06 trillion. At the same time, the fixed costs of managing portfolios have stayed about the same. In rising markets, Vanguard passes on declining costs to shareholders. Now investors must shoulder a heavier load. ...