Increasing their fees, thatís what. There was some chatter last year that fund investors would see their expense ratios go up due to the shrinking asset base of the funds. Vanguard has spoken. Itís not a surprise. Nothing to fret about.
Itís no surprise that as fund assets have taken a dive -- both as a result of the falling market and fund redemptions -- the expense ratios have increased. Some of the fund fees are based on the amount of assets in the fund, but other costs are fixed. Fixed costs and a dwindling asset base equal a higher expense ratio.
The average increase -- on both mutual funds and ETFs -- is .06% (thatís six basis points). They get a gold star for disclosing the fee increase in their 2009 prospectuses. Prospectuses arenít required to include the expected fee, but only last yearís actual expense ratio.
As an already low cost family of funds, I wouldnít run for the doors over the fee increase, but we should keep our eyes open to see if other fund companies follow suit.