The headline numbers for fund flows look great, but not for the older players.

All the hubbub this last week was about how much money Fidelity is going to save you by giving you free trades on iShares (see my previous blog, and Matt’s attempt at a rebuttal). But the real news may be that investors have figured out that expense ratios matter, and they’ve been voting with their feet, heading to the low-cost providers. Here’s the league table from the latest NSX report. This is net cash flow for January:

And here’s the other end of the spectrum, the very, very bottom of the winners and losers:

Now, the bottom of the chart is largely explained by Matt’s cryptic blog from January, where he wandered aimlessly around the $13 billion in outflows in the S&P 500 SPDR ETF (NYSEArca: SPY), a cyclical issue we’ll get into in the coming weeks, and which expanded to a net outflow of $16 billion by the end of January.

But beyond that little hiccup, the numbers can be explained very, very easily, and they all point toward investors just getting smart and cost conscious. Let’s look at a few of January’s juicier tidbits:

Can it be any clearer what’s happening here? EEM and VWO have been duking it out in the court of investor opinion for years, and it looks like investors are finally starting to pay attention. EEM, with an expense ratio of 72 basis points and a heavily optimized portfolio, is falling—very fast—to VWO, the Vanguard equivalent that charges just 27 basis points and nearly fully replicates the same underlying index. That difference in approach and price has put VWO investors over 8 percent ahead of EEM investors in the last year. And in this market, 8 percent is a phenomenal difference.

Again, here we see Vanguard with a near-full replication approach, and State Street and iShares duking it out with optimized, more expensive strategies. In this case, BND is only beating the iShares product by 74 basis points over the last year, but is beating the State Street SPDR version of the same index by 1.23 percent. Here the issue isn’t so much cost, as completeness. LAG has an expense ratio of just 13 basis points, extremely competitive with BND’s 14 bps and AGGs 20, but over recent history, the difference between holding a few hundred optimized bonds and thousands and thousands has worked in Vanguard’s favor.

Combine this with the growth of sleepy, underreported funds from Vanguard like the Vanguard Morgan Stanley REIT ETF (NYSEArca: VNQ), up $324 million in January, and the don’t-forget-Canada EAFE killer, the Vanguard FTSE All World ex-US ETF (NYSEArca: VEU), up $332 million, and it’s clear that the old Vanguard formula of “core, complete and cheap” is working in spades.

Is it any wonder iShares is nervous?

Ultimately, this is what’s good for the little guy Matt thinks I care so little about. Investors wising up to where the real values are in the market. No, that doesn’t mean “everything Vanguard,” but in January, it definitely went their direction.