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)Vanguard Wellington, (VWNFX)Vanguard Windsor II, (VQNPX)Vanguard Growth & Income and (VMRGX)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)Wellesley Income, (VNJTX)NJ Insured Long-Term Tax-Exempt, (VNYTX)NY Insured Long-Term Tax-Exempt and (VPAIX)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)Windsor II	0.33%	0.38%	1.42%
(VQNPX)Growth & Income	0.31	0.39	1.42
(VMRGX)Morgan Growth	0.36	0.44	1.24
(VWELX)Wellington	0.26	0.34	1.28
(VWINX)Wellesley Income	0.24	0.32	1.28
(VNJTX)NJ Insured Long-Term Tax- Exempt	0.14	0.20	1.15
(VNYTX)NY Insured Long-Term Tax- Exempt	0.14	0.20	1.15
(VPAIX)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.

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