Vanguard CEO Salim Ramji Talks ETF Fee Cuts

Summary

Bloomberg Talks: Vanguard CEO Salim Ramji Talks ETF Fee Cuts

Date: February 2, 2026
Host(s): Bloomberg (Katie, Scarlett, Eric)
Guest: Salim Ramji, CEO of Vanguard

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Episode Overview

In this engaging interview, Vanguard CEO Salim Ramji joins the Bloomberg team on their relaunch day to discuss the company’s latest fee cuts, the balance between lowering costs and investing in client services, expansion into active management, international ambitions, and thoughts on U.S. economic policy leadership. The conversation offers insights into how Vanguard’s client-owned structure shapes its priorities and strategies, and how the firm is evolving to meet client needs in a rapidly changing financial landscape.

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Key Discussion Points & Insights

1. Vanguard’s Ongoing Commitment to Fee Cuts

[00:37 - 02:02]

• Big Announcement: Vanguard has announced yet another round of ETF fee cuts, bringing the average asset-weighted fee from 7 to 6 basis points.

• Frequency of Fee Cuts: This is the 2,200th fee reduction in the company’s history, underlining their ongoing commitment to low costs.

  “It was a very unoriginal act from Vanguard... by our count, it was the 2200th time in which we’ve announced fee cuts since our founding.”
  — Salim Ramji [01:08]

• Client-Owned Structure: As a client-owned company, surpluses are used to both lower fees and invest in technology and services, not to pay external shareholders.

  “Because of our client ownership structure... whenever we generate a surplus... we’re able to do a couple of things. First, we’re able to invest back into important technologies... and we're able to give clients back a better deal through reduced fees.”
  — Salim Ramji [01:18]

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2. Active vs. Passive Funds & The "Cost Matters Hypothesis"

[02:02 - 04:18]

• Vanguard’s Roots: While known for passive index funds, Vanguard is expanding its range of active funds, emphasizing that low costs are significant drivers of client success—whether in passive or active investing.

• Performance with Low Fees: Vanguard’s actively managed fixed income funds have delivered high performance due to low cost hurdles—88% outperforming peers over ten years.

• Bogle’s Influence: Ramji credits founder Jack Bogle’s perspective on costs as a central guide, noting Bogle actually launched more active funds than his successors.

  “Bogle’s cost matter hypothesis really put into the central kind of focus for us that it’s costs that matter... If you look at one of the biggest predictors of long term performance in active management as well as in index management, it really is about the cost you charge.”
  — Salim Ramji [02:30, 03:33]

  “In investing... you get what you don’t pay for.”
  — Salim Ramji, quoting Jack Bogle [03:57]

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3. Balancing Fee Reductions with Service & Technology Investments

[04:18 - 05:45]

• Investing in Client Experience: In response to critiques about platform reliability and service, Ramji emphasizes increased investments in both technology and service quality, enabled by surplus.

  “Alongside the fee reductions, we’re also increasing our investments back in our client and our client service by more than half...”
  — Salim Ramji [04:55]

• Upcoming Improvements: Announced new websites, digital redesigns, and AI-driven personalized services for clients.

• Recognition: Vanguard ranked #1 in DIY client satisfaction by JD Powers.

  “We have a whole series of initiatives underway in terms of the applications of artificial intelligence to help make our client experience even better, even more personalized.”
  — Salim Ramji [05:16]

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4. Vanguard’s View on Government “Trump Accounts” for Children

[05:45 - 07:18]

• Policy Context: The U.S. government is considering allowing Robinhood to manage new accounts for children (“Trump accounts”), with major brokerages like Vanguard reportedly not considered yet.

• Ramji’s Position: Ramji avoided commenting on private government discussions but strongly endorsed the underlying concept.

• Alignment with Vanguard Philosophy: He commended the focus on early, low-cost, diversified investing as being fully in sync with Vanguard’s long-standing principles.

  “...it helps people invest early, in this case, right from when they’re born. It does it in a low cost way... stay diversified and invest for the long term. And so I think this is another innovation in being able to help with that.”
  — Salim Ramji [06:33]

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5. Challenges and Strategy for International Expansion

[07:18 - 08:52]

• Current Position: International business is still a small part of Vanguard but growing rapidly, especially in the UK, Canada, and Australia.

• Barriers: Investing is perceived as too complex and costly overseas; infrastructure like in the U.S. is lacking.

• Education/Access Focus: Vanguard is focused on making investing simple, low-cost, and accessible; helping savers become first-time investors.

• International Partnerships: Growth is occurring, in part, through independent fee-based advisors.

  “Most investors just find investing too complicated, they find it too costly... what we’re helping investors in those markets do is be able to move from being savers... to be investors for the first time.”
  — Salim Ramji [07:53]

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6. Thoughts on New Federal Reserve Chair Nominee (Kevin Marsh)

[08:52 - 09:34]

• Vanguard’s Influence: Vanguard is now the largest shareholder in many U.S. companies, making their views on U.S. economic leadership influential.

• Ramji’s Take: He expresses confidence in the nominee, emphasizing the importance of the Fed’s dual mission for long-term economic stability.

  “I think the most important thing is the Fed continues to stay focused on its dual mission. I know Kevin, I think he’s a great choice... it’s going to serve investors well for the long term.”
  — Salim Ramji [09:09]

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Notable Quotes & Memorable Moments

• On Fee Cuts:
  “It was a very unoriginal act from Vanguard... it was the 2200th time in which we've announced fee cuts since our founding.”
  — Salim Ramji [01:08]

• On Low Costs and Performance:
  “In investing, you get what you don’t pay for.”
  — Salim Ramji, quoting Jack Bogle [03:57]

• On Technology Investment:
  “We have a new website and digital design plan that we’re going to be launching later this year.”
  — Salim Ramji [05:13]

• On ‘Trump Accounts’:
  “Keep costs low, stay diversified and invest for the long term. And so I think this is another innovation in being able to help with that.”
  — Salim Ramji [06:33]

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Important Timestamps

• Vanguard fee cut announcement: [00:37 – 02:02]
• Active vs. passive funds and costs: [02:02 – 04:18]
• Client experience, service, and tech investments: [04:18 – 05:45]
• Thoughts on government children’s investment accounts: [05:45 – 07:18]
• International expansion challenges and strategy: [07:18 – 08:52]
• Views on the new Fed chair nominee: [08:52 – 09:34]

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Episode Takeaway

This episode provides a comprehensive look at how Vanguard is maintaining its foundational focus on low fees while simultaneously ramping up investment in technology and client service. Salim Ramji’s leadership emphasizes the central strategy of keeping costs low regardless of investment style, the importance of adapting to global markets, and the company’s engagement with public policy to further democratize investing. The candid, insightful answers offer a clear window into Vanguard’s evolving philosophy and operations as it aims to serve a growing, global investor base.

Transcript

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[Saleem Ramji]

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Bloomberg Audio Studios Podcasts, Radio News.

[Katie]

Let's keep this conversation going now with Saleem Ramji. He is the CEO of Vanguard. Salim, it's great to have you with us on our relaunch day. Let's start with some news out of you this morning that Vanguard unleashing another round of fee cuts. It'll take your average asset weighted fee down to 6 basis points from 7 basis points. I'm going to ask you the question that I always do, and that is what the decision tree looks like being between continuing to lower fees versus investing some of that money back into the business.

[Saleem Ramji]

Well, first of all, it's great to be here and so thank you all for having me. Yeah, it was a, it was a very unoriginal act from Vanguard because it's the, by our count, it was the 2200th time in which we've announced fee cuts since our founding. And because of our client ownership structure, Katie, as you know, we don't have any outside stockholders or any internal owners. And so whenever we generate a surplus like we did last year, we're able to do a couple of things. First, we're able to invest back into important technologies and important things for the long term health of the company. And I could talk a little bit more about how we did that as well as we're able to give clients back a better deal through reduced fees. And that's exactly what we announced this morning. But last year's extraordinary growth in the markets allowed us to do both.

[Eric]

Saleem. So obviously a lot of the fee cuts were on the pat passive funds and they are, as we say, dirt cheap. You guys have been launching nothing but active funds, though, for the past couple of years. And I got to ask, you know, you are pushing active. You know, the founder, Jack Bogle, was pretty savage towards active. How are you trying to sell active being known as the passive ETF issuer.

[Saleem Ramji]

Well, there are a couple of things in there, Eric. First of all, you know, Bogle's cost matter hypothesis really put into the central kind of focus for us that it's costs that matter. We run active funds, we run index funds, and Bogle launched more active funds during his tenure than all of his successors combined. But what we really see opportunity in is to be able to help investors keep more of what they earn. So we certainly see opportunities of that in index, and you saw that in a large portion of the cost reductions we announced today, but also last year. But if I can just underscore costs matter in active management as well. And so if you just take an example of our fixed income or our active fixed income, you know, we charge 11 basis points for our active fixed income, 88% of our active fixed income outperforms its peers over a 10 year period. And that's not a coincidence. What it means is that because we have a lower fee hurdle to overcome, it allows our investors to be much more disciplined about the investments that they're making, the risks that they're taking, whether it's around credit, whether it's around rates. And that's how our teams are able to put up kind of numbers like 88% outperforming over a 10 year period. And so we think the underlying piece is really that costs matter. There are a lot of people that come on this show that talk about performance, but if you look at one of the biggest predictors of long term performance in active management as well as in index management, it really is about the cost you charge. And you know, Bogle had a great line, which I'll repeat, which is that in investing, you know, you get what you don't pay for. And that's been true in active and that's been true in Index. And, and it's something that we believe really quite firmly here at Vanguard.

[Scarlett]

So costs matter, but service matters as well. And Jeff Tomaso, who is the editor of the Independent Vanguard Advisor, has written that. Sure. And many Vanguard investors would happily take the fee reduction that you have just announced today, but they'd also happily let Vanguard keep that extra basis point if it meant better technology and better service, specifically technology and, you know, the ability to transact EAs smoothly, flawlessly on the brokerage platform. How do you respond to that?

[Saleem Ramji]

Yeah, I think the good thing about last year's positive result for clients is that we've been able to invest behind both. So alongside the fee reductions, we're also increasing our investments back in our client and our client service by more than half. Last year, JD Powers rated as number one in DIY client satisfaction. This year we have a new website and digital design plan planned that we're going to be launching later this year. And we have a whole series of initiatives underway in terms of the applications of artificial intelligence to help make our client experience even better, even more personalized. So, Scarlett, in answer to your question, we're able to do both. We're able to make significant investments back in our client experience, back in our technology, and we're able to make sure that from a fee perspective, clients are also getting a really fair deal, whether it's an active management or an index management.

[Katie]

And on the point about technology, I mean, it's a good reminder that you don't just put out funds. You also have a brokerage platform as well. And with that in mind, I do want to ask you about a Bloomberg News scoop from last week that the US Federal government is considering handing Robinhood a key role in overseeing the new Trump accounts that it's creating for children. According to Bloomberg's reporting of the country's largest brokerages, including Fidelity and including yourself, you haven't so far been on the list of candidates considered. So I'd like to ask you, have you been in contact with the Trump administration about potentially the brokerage handling some of those Trump accounts?

[Saleem Ramji]

Well, I'm not going to get into the details of our discussions with the federal government. I will say the concept behind the Trump accounts, I think is a fabulous concept because what it does is that it helps people invest early, in this case, right from when they're born. It does it in a low cost way because the fees are capped to a low cost level. And the underlying ethos is a diversified, broad based set of indices. And as we look at the best ways in which to create long term wealth for Americans, this has really been something that Vanguard's been talking about for a very long time, keep costs low, stay diversified and invest for the long term. And so I think this is another innovation in, in being able to help with that. And, and we're supporting that in any way that we can. But I think that the underlying ethos is a very positive one.

[Eric]

Saleem, I want to talk about international. So Vanguard dominates in the US you're 28% of all fund assets here, double the old high water mark. You want to expand internationally. You said you want to go from 17 million clients to 4, 40 million in five years. I have found international is way harder because people generally don't worry about retirement as much as they do here. So they're not as good as shopping for funds. And you don't have fee based advisors, it's more brokers and distribution. How do you overcome those two issues?

[Saleem Ramji]

Well, you know, International is, in the scheme of it, a relatively small part of Vanguard, but it's an incredibly fast growing part. And we're principally based in markets like the uk, like Canada, like Australia. And what we found there is that most investors just find investing too complicated, they find it too costly. And there aren't kind of platforms like there are here in the United States to enable, to enable them to access it. So in many cases, what we're helping investors in those markets do is be able to move from being savers, often in bank deposits, to be able to be investors for the first time. And that mantra of keeping costs low, of keeping it simple and of making it easy for people to access seems like it's working. And there's a growing population in many of those markets of fee based advisors, independent fee based advisors, where Vanguard investors are doing quite well in terms of teaming up with them to be able to help them build kind of even better, even more diversified, long term portfolios slim.

[Scarlett]

I want to end with getting your thoughts on the new Fed chair nominee. Kevin Marsh with Vanguard this morning, single biggest shareholder in so many US listed companies. What is your reaction to Mr. Walsh as to the potential new Fed chair?

[Saleem Ramji]

Yeah, look, I think the most important thing is the Fed continues to stay focused on its dual mission. I know Kevin, I think he's a great choice. But the broader piece is really about making sure kind of the Federal Reserve has done what it's done, I think so effectively for generations of, of people. So I think that's going to continue and I think it's going to serve investors well for the long term.

[Katie]

All right, Saleem, that's a good place to leave it. Really appreciate your time today. Big day for you with the fake cuts, big day for us with the relaunch. So really appreciate it. That is Vanguard CEO.

[Saleem Ramji]

Thanks for having me.

[Katie]

Thank you.