Vanguard's ETFs raise brows

Vanguard is well-known for its low cost approach to index fund investing. Certainly, it helped usher in the passive index movement at the retail level. Is it poised to do the same for exchange-traded funds? It has recently filed a registration statement with the SEC for an ETF that will track the Morgan Stanley EAFE index. That brings it into competition with the iShares EAFE Index ETF, which is sponsored by Barclays Global Investors--the second largest ETF. The real news is that Vanguard will likely charge an expense ratio of just 0.15 percent, compared to the 0.35 percent charged by the iShares MSCI EAFE. The price competition will be interesting to watch. At some point, you have to wonder: When fees get this low, are buyers really sensitive to it?

For more:
- here's the MarketWatch article