More Vanguard Funds Join the Ultracheap 'Admiral' Club

Eight more cheap Vanguard funds are getting a bit cheaper for long-term investors with fat balances.

On Monday, the $570 billion firm best-known for ultracheap index funds added even cheaper "Admiral" shares to eight funds, including four stock and balanced funds: (VWELX Quote)Vanguard Wellington, (VWNFX Quote)Vanguard Windsor II, (VQNPX Quote)Vanguard Growth & Income and (VMRGX Quote)Vanguard Morgan Growth. The new shares, now available on 28 Vanguard funds, will be available to investors with big and/or long-term stakes in Vanguard funds.

The new shares reward the most lucrative fish in the mutual fund pool -- those who have big balances and don't cash out. The move is almost certainly a nod to the competition of exchange-traded funds and other low-cost options for fund investors.

To qualify for the new shares, investors will need to have either $250,000 in a fund, $150,000 in a fund they have held for at least three years with online account access or at least $50,000 in a fund they have held for a minimum of 10 years with online account access.

In addition to the four stock or balanced funds, the new shares were also added to Vanguard's (VWINX Quote)Wellesley Income, (VNJTX Quote)NJ Insured Long-Term Tax-Exempt, (VNYTX Quote)NY Insured Long-Term Tax-Exempt and (VPAIX Quote)PA Insured Long-Term Tax-Exempt funds. The firm plans to add Admiral shares to 26 more funds by year-end.

The new share class's administrative expenses are significantly lower than the firm's already cheap investors class shares. The Vanguard Wellington fund's investor share class carries a 0.34% expense ratio, compared with 0.26% for its freshly minted Admiral share class. The average large-cap value fund carries a 1.42% expense ratio, according to Morningstar.

Admiral Club Fees How Vanguard Admiral share fees stack up against Vanguard's investor-share expenses and expenses at other funds
Vanguard Fund	Admiral Share Expenses	Investor Share Expenses	Avg. Peer's Expenses
(VWNFX Quote)Windsor II	0.33%	0.38%	1.42%
(VQNPX Quote)Growth & Income	0.31	0.39	1.42
(VMRGX Quote)Morgan Growth	0.36	0.44	1.24
(VWELX Quote)Wellington	0.26	0.34	1.28
(VWINX Quote)Wellesley Income	0.24	0.32	1.28
(VNJTX Quote)NJ Insured Long-Term Tax- Exempt	0.14	0.20	1.15
(VNYTX Quote)NY Insured Long-Term Tax- Exempt	0.14	0.20	1.15
(VPAIX Quote)PA Insured Long-Term Tax- Exempt	0.14	0.20	1.15
Source: Vanguard and Morningstar.

While converting from investor shares to Admiral shares might be a good idea and won't trigger capital gains taxes, it's not automatic. Investors must request conversion, mainly through the firm's Web site.