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Rating:WSJ Sees More Fund Shops Following in Vanguard's Footsteps Not Rated 0.0 Email Routing List Email & Route  Print Print
Monday, March 23, 2009

WSJ Sees More Fund Shops Following in Vanguard's Footsteps

by: Armie Margaret Lee

In Monday's Wall Street Journal Fund Track column, Sam Mamudi writes that more fund shops could hike fees as they grapple with declining assets amid a tough market environment.

Vanguard has decided to hike fees on 31 of its 110 funds, with the average increase being 5 bps (see The MFWire, 03/20/09).

Vanguard spokesman John Woerth told Mamudi that the firm is "not immune" to the market conditions, adding that Vanguard is "still the low-cost leader by far."

Dan Culloton, Morningstar's associate director of fund analysis, said Vanguard's decision is "a testament to the market environment that even a fund family [like Vanguard] that's been taking in new money has seen its assets decline so much that it has to raise expense ratios."

American Funds, for its part, stopped waiving 10 percent of its management fees at the end of last year. The move was in response to "declining assets and continuing expenses," company spokesman Chuck Freadhoff said.

Fee hikes at other fund firms may be higher than at mutually-owned Vanguard, Mamudi noted, pointing out that for publicly traded investment managers or those that utilize transfer agent services to yield profit, there may be greater pressure to implement fee increases.

Invesco Aim has not arrived at a decision on 2009 expense ratios, while representatives for Fidelity Investments, Legg Mason, BlackRock and Franklin Resources were not available for comment.  

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