The cheapest stock funds out there will soon be a little bit cheaper for buy-and-hold types with big balances. On Wednesday Vanguard, the $570 billion fund titan best known for its ultra-cheap index funds, announced its plan to start launching a new and even-cheaper "Admiral" share class in the fourth quarter. The shares will be for investors with big and/or long-term stakes in Vanguard funds. The move rewards moneyed and loyal shareholders -- the most lucrative fish in the mutual fund pool. One Vanguard watcher says it's also a public relations maneuver at a time when exchange-traded funds and a host of other new options for fund investors have made competition for new dollars tougher. To qualify for the new shares, investors will need to have either $250,000 in a recent fund, $150,000 in a fund they have held for at least three years, or at least $50,000 in a fund they have held for at least 10 years. The shares will initially be for seven stock funds: ( VFINX) Vanguard 500 Index , ( VTSMX) Vanguard Total Stock Market Index , ( VEXMX) Vanguard Extended Market Index , ( VIGRX) Vanguard Growth Index , ( VIVAX) Vanguard Value Index , ( NAESX) Vanguard Small-Cap Index and ( VBINX) Vanguard Balanced Index . Admiral shares will launch for most, if not all, of Vanguard's stock and bond funds next year, and converting to the new shares isn't a taxable event, according to a company statement. The new share class's administrative expenses will be up to 25% lower than the firm's already cheap investor class shares. Admiral share classes of the Vanguard 500 Index, for example, will have a 0.12% total expense ratio, compared to 0.18% for the investor class shares. The average U.S. stock fund's expense ratio is 1.23%, according to Morningstar. The upshot: If you had a whopping $300,000 account in the fund, you'd save $180 annually, according to Vanguard. While broker-sold funds routinely waive and reduce sales charges for big investments, and institutional funds with sky-high minimums have lower expenses than clones for customers with less money to invest, no-load or direct-sold funds typically don't offer these types of price breaks for fat cats. The new shares offer benefits for investors and the company. Investors pay lower expenses and are encouraged to follow a long-term, low-turnover strategy. The company, meanwhile, enlists another tool to retain its most profitable investors, and the new shares may be a siren to attract more. But there are a couple of odd wrinkles with the new plan that rankle one Vanguard watcher. First, even though converting to the cheaper shares generally isn't a taxable event, the conversion isn't automatic. Investors have to request the move. Those with $250,000 accounts can request the switch by phone, mail or the firm's Web site. Those with lower amounts have to execute their exchange on the Web site, where they'll have to register if they haven't already done so, according to a company statement. "It seems more like great PR than a huge win for shareholders because most people will forget about it. I don't see why Vanguard can't just do this automatically. It seems kind of silly to put the onus on the shareholder if the idea is to save them money," says Dan Wiener, editor of the Independent Advisor for Vanguard Investors newsletter. A Vanguard spokesman didn't return a call for comment. Also, the 10-year holding period is an odd stipulation with this first group because only Vanguard 500, Vanguard Small-Cap Index and Vanguard Extended Market Index have 10-year records, according to Wiener. Wiener adds that the move clearly adds a plus for Vanguard beyond the mutual fund arena. The firm, already acknowledged as the low-cost leader in the mutual fund market, might be trying to boost that image as it prepares to do battle in the competitively priced exchange-traded fund market. Exchange-traded funds, or ETFs, are baskets of stocks that trade as one security on an exchange. Many believe they pose a serious threat to mutual funds, particularly the index funds market that Vanguard dominates. Wiener says it's no mistake that the Admiral shares of the Vanguard 500 will lower the fund's expenses to 0.12%, matching the fees of the popular S&P 500 -tracking ETF Standard & Poor's Depositary Receipts ( SPY), more commonly called spiders or SPDRs, which trade on the American Stock Exchange .