Vanguard Group, the company behind the world’s-biggest emerging markets exchange-traded fund, has cut the price of that ETF, VWO, by 18 percent, making it the world’s cheapest, too. It also slashed expense ratios on five other ETFs, saying the cuts reflected greater efficiencies in the way it runs the funds.

“The reductions are a function of the way Vanguard funds operate: When funds experience greater efficiencies—either through asset growth, operating cost reductions, or a combination of both, the savings are delivered to the fund owners in the form of lower expenses,” the Valley Forge, Pa.-based company said in a press release.

While Vanguard officials are loath to describe the company’s low-cost strategy as part of a price war, many ETF industry sources say that part of the asset-gathering battle in the industry will be waged on the pricing front. San Francisco-based Schwab, formed, like Vanguard, with low costs in mind, has indicated it aimed to offer the lowest-priced ETFs—and that that meant beating Vanguard.

The Vanguard Emerging Markets ETF (NYSEArca: VWO) now costs 0.22 percent, compared with 0.27 percent previously, making it cheaper than the Schwab Emerging Markets Equity ETF (NYSEArca: SCHE), which has an annual expense ratio of 0.25 percent.

The other ETFs Vanguard cut expense ratios on and their respective price cuts are:

• Vanguard MSCI Pacific ETF (NYSEArca: VPL), to 0.14 percent from 0.16 percent
• Vanguard MSCI European ETF (NYSEArca: VGK) to 0.14 percent from 0.16 percent
• Total World Stock ETF (NYSEArca: VT) to 0.25 percent from 0.30 percent
• FTSE All-World ex-U.S. Index (NYSEArca:  VEU) to 0.22 percent from 0.25 percent
• FTSE All-World ex-U.S. Small Cap (NYSEArca: VSS) to 0.33 percent from 0.40 percent

VSS’ new expense ratio now beats the Schwab International Small Cap Equity ETF (NYSEArca: SCHC) as well. SCHC comes with an annual cost of 0.35 percent, according to information posted on Schwab’s website.

Vanguard, the No. 3 U.S. exchange-traded fund firm, had total ETF assets of $154.56 billion as of Feb. 24, according to data compiled by IndexUniverse.com.

Schwab, which launched the first of its own ETFs in November 2009, has gathered assets quickly, for a relative latecomer to the exchange-traded fund business. As of Thursday’s close, it had $3.41 billion in ETF assets.

A Schwab official told IndexUniverse.com today that Schwab remains focused on being a low-cost provider in the world of ETFs.

"For all Schwab ETFs, we seek to provide the best value for investors by offering funds that have among the lowest operating expense ratios and total cost of ownership, and will continue to do so," Schwab spokeswoman Alyson Nikulicz said.