Over the past few years, U.S. investors have increasingly focused on the costs of investing—and investment providers have taken notice, particularly with respect to index funds and exchange-traded funds (ETFs).

Interestingly enough, when Vanguard entered certain markets outside the U.S. where price competition was not present, investment providers suddenly started reducing expense ratios in the wake of Vanguard’s entry. Our impact on the Canadian and U.K. markets is the most recent example of this phenomenon. We are proud of our role in helping investors and advisors globally benefit from cost-cutting at major investment firms, and it is gratifying to see what the media hail as the “Vanguard effect” coming back home to the states.

Vanguard research has shown investors are increasingly “voting with their feet” in favor of lower-cost investment products, whether conventional mutual funds or ETFs, stock or bond funds, passive or actively managed. (Read our analysis of cash flow trends.)

As in any business, client expectations change. As a result, investment companies are increasingly lowering expense ratios, oftentimes to either attract new investors or maintain their existing client base.

Vanguard is different from other investment firms because we are owned by our funds—and, in turn, the funds are collectively owned by fund shareholders. Well, you may be saying, “So what?” As esoteric as ownership structure may seem, it is our unique structure that enables us to provide services at cost and return profits to the funds in the form of reduced expense ratios. It is a structure that enables us to pass along economies of scale—and reduce expenses—as fund assets grow. Low costs are therefore intrinsic to our structure rather than a strategy aimed at attracting fund flows. And that should matter a lot as it is an enduring commitment and not a passing fancy.

Vanguard has a long history of low-cost leadership. It is not just in a handful of products. It is across the board cost leadership—in index funds, active funds, ETFs, annuities, 529s, 401(k) plans, and so on. We have been lowering the cost of investing for 36 years, and we will continue to do so as economies of scale permit.