Vanguard has announced and now implemented, lower expense ratios on 38 of their most popular funds. This is most likely in response to Fidelity lowering their expense ratios to zero on a couple of their funds. The race to zero fees is in full swing, and this is great news for investors. Remember: In investing, you get what you don’t pay for.

That being said, I don’t think anyone should move their money from one brokerage company to the other: Fidelity -> Vanguard or Vanguard -> Fidelity, in chasing fees. With fees essentially zero, the better way to differentiate one index fund from another is its tracking error and after-tax return. How well a brokerage company tracks the indexes matter more than a couple basis points in fees.

For example, Vanguard is pretty hard to beat on the indexing front. The 5-year after-tax returns on their Total Stock Market index fund is 12.03% where Fidelity’s is 11.82%. That’s a difference of 21 basis points. Fidelity’s fund has a zero expense ratio, while Vanguard charges 0.04%, or four basis points. It’s better to pay 4 points on a fee to gain 21 points on after-tax returns. Vanguard can do this by flushing capital gains out of their fund via their ETF share class.

But that’s really down in the weeds. The great news is: fees are trending lower, and that helps everyone. It’s a great time to be an indexer.