By Chris Dieterich

So much for détente in the long-running ETF fee war.

Vanguard Groups move to launch a cheap, passive muni-bond exchange-traded fund again pits the low-cost provider against more established rivals funds.

The fund company on Tuesday filed a registration statement  with regulators for mutual and exchange-traded iterations of the Vanguard Tax-Exempt Bond Index Fund. This launch would lower the already-low price floor in the ETF space. Vangauards ETF will cost 0.12%, or $12 per $1,000 10,000 invested. BlackRock s (BLK ) $4.2 billion iShares National AMT-Free Muni Bond ETF (MUB ), the markets leader, charges 0.25%. Both ETFs will track the same S&P National AMT-Free Municipal Bond Index. Vanguard already offers active muni-bond mutual funds, but not passive.

Prices matter to long-term ETF investors, who tend to be a cost-conscious lot in the first place. Analysts say that potential for a market-share grab is high in muni bonds: Fully $972 million has flowed into MUB since the start of 2013, according to ETF.com.

Todd Rosenbluth. director of ETF & mutual fund research at S&P Capital IQ, says that tax-free bonds have been one of the gaps in Vanguard’s lineup even as the company rakes in assets.

We think some cost-conscious investors will shift toward the cheaper passive offerings from Vanguard as they have in the past few years, Rosenbluth says.

Vanguards active muni-bond mutual funds were already less expensive than rivals. The passive funds will cost 0.12% for  admiral class and 0.2% for the investor class.

American Funds $9.7 billion Tax Exempt Bond Fund of America (AFTEX ) charges 0.56%, while the $6.2 billion Oppenheimer Rochester Municipals Fund (RMUNX ) charges 0.72% and the $7.5 billion Invesco High Yield Municipal Fund (ACTHX ) costs 0.87%. Its worth noting that performance for each of these active funds has been superior to the passive iShares National AMT-Free Muni Bond ETF over the past five years, according to Morningstar.

Home Builder Stocks Jump on Low Rates Next

ETF Market Vital Signs, Jan. 7: Stocks Rebound