The Markets February 4, 2025

Vanguard Announces Largest Fee Cut in Firm’s History

Of the funds with reduced fees, 48 include institutional or institutional plus share classes.

Reported by

The Vanguard Group Inc. announced Monday fee reductions on 168 share classes across 87 investment funds in what the firm called its largest fee cut to date. The firm projects that the fee reductions are expected to save investors of all kinds more than $350 million this year alone.

Of the funds with reduced fees, 48 include institutional or institutional plus share classes. The fee reductions for these share classes ranged anywhere from one to five basis points. Target-date funds for retirement plan participants were not included in the fee reductions.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

Vanguard offered 428 funds worldwide—212 in the U.S.—as of the end of 2023, according to its website.

“Lower fees mean fund investors can keep more of their returns and a competitive edge for our funds,” said Greg Davis, Vanguard’s president and chief investment officer, in a press release. “When you think about our actively managed funds, our managers don’t have to take unnecessary risk to earn back our fees. Our financial model and structure [create] a virtuous cycle of economies of scale, where we can continue to reduce fees and invest in things like technology and talent.”

The prospectuses of all affected funds were updated Monday in filings with the Securities and Exchange Commission, according to the announcement.

Expense ratios may cover investment advisory fees, marketing and distribution expenses, brokerage fees and custodial, transfer agency, legal and accounting fees, according to Vanguard. The full list of funds with reduced fees can be found here.

The company has about $10.4 trillion in assets under management as of November 30, 2024. At the end of 2023, it had approximately $8.6 trillion in assets under management worldwide.

The move to lower fees come less than one year after Vanguard announced that Salim Ramji, the former head of BlackRock Inc. iShares, would take over as the firm’s CEO, succeeding Tim Buckley, who retired at the end of 2024.

The Markets February 3, 2025

Trump Issues Executive Order to Create Sovereign Wealth Fund

The fund, which could require Congressional approval, is to be established by the Department of the Treasury and the Department of Commerce over the next 12 months.

Reported by

President Donald Trump signed an executive order on Monday to establish a U.S. sovereign wealth fund, to be established by officials from the Department of the Treasury and the Department of Commerce over the next 12 months. Treasury Secretary Scott Bessent told reporters the fund would be of “great strategic importance,” Bloomberg reported.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The text of the executive order was not immediately available; executive orders are typically published in the Federal Register a few days after they are signed.

Trump had campaigned on the idea of establishing a sovereign fund. Speaking at the Economic Club of New York in September 2024, Trump proposed a national sovereign fund, funded through tariffs, to invest in projects like manufacturing. 

Speaking to reporters in the Oval Office on Monday, Trump suggested that TikTok could be purchased by the sovereign fund. The social media app, removed from app stores pending a divestment from parent company ByteDance, was reported to have Oracle and Microsoft lined up as potential suitors. The price of the company is expected to be at least $40 billion, according to multiple estimates. 

It is unclear how the sovereign fund would be funded or where its distributions would go. Spokespersons for Treasury and Commerce did not immediately respond to requests for comment. News reports suggested the creation of the fund would require Congressional approval.

“Investors and markets alike will closely watch how this fund differentiates itself from established models abroad,” says Michael Ashley Schulman, founding partner in and CIO of multi-family office Running Point Capital Advisors. “Any missteps in its early stages could have reputational and financial consequences that extend well beyond our borders.”

In some states and in other countries, sovereign wealth funds are funded through government surpluses or certain taxes on the extraction of natural resources, including fossil fuels.

Multiple U.S. states already have sovereign funds, such as the $80 billion Alaska Permanent Fund, which invests the state’s oil revenues. There are 21 state sovereign funds in the U.S. across 20 states; Texas has two.

Schulman notes that the executive order is a bold, unconventional approach that could modernize how SWFs are managed, but it also raises questions about transparency, checks and balances, and investment selection criteria.

“While the idea of a government-directed fund is possibly appealing in terms of national strategy, the key will be ensuring that governance and investment mandates are clearly defined to avoid politicization of asset allocation,” Schulman says. “The success of such a fund will depend on its ability to maintain independent, professional management, free from short-term political pressures.”

There is no shortage of institutional assets in the U.S. As of the third quarter of 2024, public defined benefit pension funds alone managed a collective $6.25 trillion in assets, according to the Federal Reserve.

Sovereign fund giants include Norway’s $1.74 trillion Government Pension Fund Global, Saudi Arabia’s $925 billion Public Investment Fund and the $1.3 trillion China Investment Corp. 

«