VSIAX - Vng Small cap value ER drop

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smiley
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VSIAX - Vng Small cap value ER drop

Post by smiley »

perhaps these ER drops are not as exciting as they once were, but gadzooks, a drop from 0.21% to 0.1% is reason for celebration, no?
:happy
livesoft
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Re: VSIAX - Vng Small cap value ER drop

Post by livesoft »

I vaguely recall that the expense ratio went up in the past few years for some reason like an SEC rule or something. That is, something not labelled as an expense had to be included as an expense. Maybe they figured out how to hide that cost something place and avoid the rule? Also if expenses haven't changed, but NAV has doubled, then the expense ratio should drop in half.
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G-Money
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Re: VSIAX - Vng Small cap value ER drop

Post by G-Money »

livesoft wrote:I vaguely recall that the expense ratio went up in the past few years for some reason like an SEC rule or something. That is, something not labelled as an expense had to be included as an expense. Maybe they figured out how to hide that cost something place and avoid the rule? Also if expenses haven't changed, but NAV has doubled, then the expense ratio should drop in half.
Right. The rule related to investment in business development companies ("BDCs"). https://retirementplans.vanguard.com/VG ... enseRatios

Perhaps Vanguard shed its investment in BDCs over the past year, or is in the process of doing so with its change in underlying index.
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smiley
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Re: VSIAX - Vng Small cap value ER drop

Post by smiley »

too bad, i was hoping the annual savings of $50 from the drop in my taxable account expenses would allow me a $100 dinner tonite.

:happy
rkhusky
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Re: VSIAX - Vng Small cap value ER drop

Post by rkhusky »

This page seems to indicate that VG SV Admiral went from 0.21 to 0.20: https://advisors.vanguard.com/VGApp/iip ... atio042013
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G-Money
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Re: VSIAX - Vng Small cap value ER drop

Post by G-Money »

rkhusky wrote:This page seems to indicate that VG SV Admiral went from 0.21 to 0.20: https://advisors.vanguard.com/VGApp/iip ... atio042013
See: https://personal.vanguard.com/us/funds/ ... =INT#tab=0
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rkhusky
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Re: VSIAX - Vng Small cap value ER drop

Post by rkhusky »

G-Money wrote:
rkhusky wrote:This page seems to indicate that VG SV Admiral went from 0.21 to 0.20: https://advisors.vanguard.com/VGApp/iip ... atio042013
See: https://personal.vanguard.com/us/funds/ ... =INT#tab=0
Seems to be some discrepancies. Wonder which page is right?
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smiley
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Re: VSIAX - Vng Small cap value ER drop

Post by smiley »

rkhusky wrote:
G-Money wrote:
rkhusky wrote:This page seems to indicate that VG SV Admiral went from 0.21 to 0.20: https://advisors.vanguard.com/VGApp/iip ... atio042013
See: https://personal.vanguard.com/us/funds/ ... =INT#tab=0
Seems to be some discrepancies. Wonder which page is right?

i own this fund, it did go down this month from 0.21 to 0.2. then today, vanguard informed me that it went down to 0.1%. no articles at vanguard that i could find to explain it. i suspect livesoft and G-Money are correct.

my wife the speed-racer just received a speeding ticket, so i definitely won't be enjoying that $100 dinner tonite.

:happy
NamedAfterThoreau
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Re: VSIAX - Vng Small cap value ER drop

Post by NamedAfterThoreau »

G-Money wrote:Perhaps Vanguard shed its investment in BDCs over the past year, or is in the process of doing so with its change in underlying index.
From the CRSP Methodology Guide, the CRSP universe of stocks excludes BDC's (see Page 3)

CRSP Methodologies

The Small Cap Value fund (along with a bunch of others) announced yesterday they had completed switching over to the CRSP indexes. I guess it would be too much of a coincidence to assume this drop in ER is not related.
NamedAfterThoreau
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Re: VSIAX - Vng Small cap value ER drop

Post by NamedAfterThoreau »

Also, Mid Cap Value is showing a 0.1% ER (as of 4/17/13). It looks like it reversed the increase to 0.12% it showed on 4/12.
rkhusky
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Re: VSIAX - Vng Small cap value ER drop

Post by rkhusky »

smiley wrote:
rkhusky wrote:
G-Money wrote:
rkhusky wrote:This page seems to indicate that VG SV Admiral went from 0.21 to 0.20: https://advisors.vanguard.com/VGApp/iip ... atio042013
See: https://personal.vanguard.com/us/funds/ ... =INT#tab=0
Seems to be some discrepancies. Wonder which page is right?

i own this fund, it did go down this month from 0.21 to 0.2. then today, vanguard informed me that it went down to 0.1%. no articles at vanguard that i could find to explain it. i suspect livesoft and G-Money are correct.

my wife the speed-racer just received a speeding ticket, so i definitely won't be enjoying that $100 dinner tonite.

:happy
If you got it straight from Vanguard, that seems more reliable than the web site numbers.
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G-Money
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Re: VSIAX - Vng Small cap value ER drop

Post by G-Money »

NamedAfterThoreau wrote:
G-Money wrote:Perhaps Vanguard shed its investment in BDCs over the past year, or is in the process of doing so with its change in underlying index.
From the CRSP Methodology Guide, the CRSP universe of stocks excludes BDC's (see Page 3)

CRSP Methodologies

The Small Cap Value fund (along with a bunch of others) announced yesterday they had completed switching over to the CRSP indexes. I guess it would be too much of a coincidence to assume this drop in ER is not related.
Thanks for doing the research and providing the link.
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nvboglehead
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Re: VSIAX - Vng Small cap value ER drop

Post by nvboglehead »

Great news! Thank you for posting this. And thanks to VG for doing the change to CRSP for the cost savings.

Dale
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NamedAfterThoreau
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Re: VSIAX - Vng Small cap value ER drop

Post by NamedAfterThoreau »

nvboglehead wrote:Great news! Thank you for posting this. And thanks to VG for doing the change to CRSP for the cost savings.

Dale
To the extent that this reduction is just the exclusion of BDC's, then it isn't really an expense reduction. The following article has a good discussion on it Seeking Alpha article on BDC - part of it says:
Although the SEC requires that BDC costs be included in a fund's expense ratio, these fees are not incurred by the fund. They have no impact on a fund's total return or on its tracking error relative to an index.
The lower stated expense ratio does, however, give Vanguard a decided marketing advantage :happy
feh
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Re: VSIAX - Vng Small cap value ER drop

Post by feh »

Anybody know if we can expect a similar decline in the ER of VBR?
NamedAfterThoreau
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Re: VSIAX - Vng Small cap value ER drop

Post by NamedAfterThoreau »

feh wrote:Anybody know if we can expect a similar decline in the ER of VBR?
Yes, it's also down to 0.1%.
feh
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Re: VSIAX - Vng Small cap value ER drop

Post by feh »

NamedAfterThoreau wrote:
feh wrote:Anybody know if we can expect a similar decline in the ER of VBR?
Yes, it's also down to 0.1%.
Interesting. On M*, VSIAX shows an ER of .1, but VBR still shows .2.
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G-Money
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Re: VSIAX - Vng Small cap value ER drop

Post by G-Money »

feh wrote:
NamedAfterThoreau wrote:
feh wrote:Anybody know if we can expect a similar decline in the ER of VBR?
Yes, it's also down to 0.1%.
Interesting. On M*, VSIAX shows an ER of .1, but VBR still shows .2.
In general, I tend to trust first-hand information over information reported by third parties. I would trust Vanguard to know and accurately report its ER more than I would trust Morningstar to know and accurately report the ER of Vanguard funds.
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Re: VSIAX - Vng Small cap value ER drop

Post by Barry Barnitz »

Hi:

There has been no fundamental difference in the expense ratios of Vanguard's domestic index funds. The drop in the expense ratios is due to the fact that the CRSP indexes that the funds now track do not include Business Development Companies (please refer to Business Development Company - Bogleheads). Because BDC's are essentially structured as closed end funds, the SEC ruled that the underlying expense ratio of a BDC must be reported as an "acquired fund expense" by any mutual fund holding a BDC and thus be included in the fund's expense ratio. (Please refer to Acquired fund fees and expenses - Bogleheads.

This ruling also affects Vanguard's popular fund of funds balanced funds such as the Target Retirement Funds and LifeStrategy funds, which in and of themselves, do not charge an expense ratio. Thus these funds formerly reported an expense ratio of 0% (although the mutual fund's the fund invested in did have expense ratios). SEC rules require that these "acquired fund expenses" now be reported in these funds' reported expense ratios.

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BrandonBogle
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Re: VSIAX - Vng Small cap value ER drop

Post by BrandonBogle »

But since CRSP doesn't track BDCs and Vanguard is how fully converted to this index, shouldn't this mean that the fund no longer holds any BDCs? If so, then overall isn't it a reduction still? With the previous SEC ruling, weren't they adding back in the BDC expenses to the return of the underlying holding and then listed the ER? So performance ended up showing equal after expenses? Granted, the new index may not end up with the same returns as the old one, so it could very well end up being a wash.
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BrandonBogle
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Re: VSIAX - Vng Small cap value ER drop

Post by BrandonBogle »

Oh, looks like David might be saying that there essentially was no artificial increase of the return when the BDC expense was line-item listed

http://www.bogleheads.org/forum/viewtop ... 4#p1672914
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