Eight more cheap
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:
Vanguard Windsor II,
Vanguard Growth & Income and
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
NJ Insured Long-Term Tax-Exempt,
NY Insured Long-Term Tax-Exempt and
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
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.