Is VBIAX really closed to new investors?

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Is VBIAX really closed to new investors?

Postby ldm616 » Mon Jul 01, 2013 6:42 pm

I was looking at VBINX and realized VBIAX is less expensive. When I tried to buy it via Schwab I got an error message saying VBIAX is closed to new investors - only existing investors can buy more shares. Can anyone confirm that this is true? I don't see any mention of it on Vanguard's website. Anything I should consider in lieu of VBIAX other than VBINX?
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Re: Is VBIAX really closed to new investors?

Postby ldm616 » Mon Jul 01, 2013 7:17 pm

Would I be better served with a 60/40 mix of VTI and BND and balance annually? With the BND in my tax-deferred/exempt accounts? Seems like the only downside would be the effort to rebalance annually?
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Re: Is VBIAX really closed to new investors?

Postby nisiprius » Mon Jul 01, 2013 7:19 pm

No, VBIAX is not closed to new investors, but you probably have to buy it directly at Vanguard. Nobody in this forum has yet been able to get a completely straightforward answer on this, let alone what the business story behind it might be, but forum members' experience seems to suggest this, at least as a general rule:

  • You can buy investor shares of Vanguard's non-index funds anywhere.
  • You can buy Admiral shares of Vanguard's non-index funds, e.g. Wellington, anywhere, minimum $50,000 initial purchase.
  • You can buy investor shares of Vanguard's index funds anywhere.
  • You can buy Admiral shares of Vanguard's index funds at Vanguard. I don't think any of them are closed. VBIAX is NOT closed.
  • You can NOT buy Admiral shares of Vanguard's index funds anywhere but at Vanguard.
  • Phone reps at other brokerages often seem to be confused or inaccurate about this, and sometimes the only way you can find out whether you can buy a share class is to place an order and see what happens.
  • Some brokerages where you cannot buy Admiral shares give the appearance that you are able to buy Signal shares, which have the same low expense ratio. Experiments by forum members suggest that attempts to buy Signal shares may in fact succeed. Nobody knows whether you're supposed to be able to, or whether a computer bug is letting you get away with something.
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