Vanguard Commodities Index Fund in the future?

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Vanguard Commodities Index Fund in the future?

Postby Visitor » Wed Jan 07, 2009 7:43 pm

Just out of curiosity, now that Vanguard has finally created a Small Cap International Index Fund is there a possibility that one day a Commodities Index Fund might be established as well?

They do have the Precious Metals fund. I wonder the reasons why Vanguard hasn't create a more diversified fund to allow investors to gain exposure to this particular asset class? Costs? Lack of demand by investors? Commodities not recognized as a true asset class? What?

If a Vanguard Commodities Index Fund were established, how many of you would jump right in and how much ER would you be willing to pay?

What kind of ER would you expect?

Let's get those letters rolling to Vanguard!
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Postby eurowizard » Wed Jan 07, 2009 7:54 pm

I would be willing to pay a 0.75 ER to 1.00 ER with up to a 0.5% purchase/redemption fee, with the understanding that it will be reduced as their assets grow.

I currently pay 1.25% for PCRDX - the Pimco fund. Pimco has been doing it longer so unless VG fees are at least the same, I dont see the advantage.

I believe VG has not yet created a CCF because they tend to attract short term traders and VG is against short term trading due to increased operating costs associted with it and that would force them to charge higher ERs. VG is happier with long-term investors and can charge very low ERs due to lower costs associated. I dont think VG wants to attract speculators and to be honest, I think I would rather they didnt make a CCF fund because if it did attract speculators it would clog up their customer service lines for people who dont plan on bothering them 50 times a day with speculations.

So that being said unless VG could do a much better job than Pimco, I would rather they not do it at all.
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Postby paulob » Wed Jan 07, 2009 8:12 pm

I believe VG has not yet created a CCF because they tend to attract short term traders and VG is against short term trading due to increased operating costs associted with it and that would force them to charge higher ERs.


Vanguard has dealt with this by charging redemption fees: up to one year on some funds and five years on the tax-managed funds. When I first purchased Health Care, Primecap and Cap Opp, I believe they were all subject to a redemption fee in the first five years.
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Postby Easy Rhino » Wed Jan 07, 2009 8:22 pm

Vanguard doesn't seem to get into very exotic investments. Even precious minerals and mining invests in equities, not commodities.

And a CC fund is even more complicated.
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Hi

Postby Visitor » Wed Jan 07, 2009 8:38 pm

Well they already have energy and metals. I would like for them to offer a diversified option, even if it's equity based.

What I would really want is a diversified low cost option that has an equal weighting of metals, agriculture, and energy. If that were possible.

Like another poster said, redemption fees, would put limits on day traders and speculators.
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Postby stratton » Wed Jan 07, 2009 10:00 pm

The Managed Payout funds can have commodities. I want to know who is/will manage them. That might be a place to start for any hints.

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Commodities in the Managed Payout Funds

Postby Barry Barnitz » Wed Jan 07, 2009 10:19 pm

stratton wrote:The Managed Payout funds can have commodities. I want to know who is/will manage them. That might be a place to start for any hints.

Paul


According to the semiannual report, the funds are using a Dow Jones-AIG Commodity Index Total Return Swap Contract for commodity investment.

The asset allocation breakdown for the funds, as of the 05/31/08 semiannual report, is given in our forum's work-in-progress page on Vanguard Managed Payout Funds.

regards,
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Re: Commodities in the Managed Payout Funds

Postby stratton » Wed Jan 07, 2009 10:30 pm

Barry Barnitz wrote:According to the semiannual report, the funds are using a Dow Jones-AIG Commodity Index Total Return Swap Contract for commodity investment.

That means they are doing it themselves.

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Commodities

Postby Dan Kohn » Wed Jan 07, 2009 11:04 pm

For some reason, I heard a lot more demand for Vanguard to offer a commodities fund last year. I wonder why?

http://finance.yahoo.com/q/bc?s=DJP&t=2 ... z=m&q=l&c=
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Re: Commodities

Postby eurowizard » Wed Jan 07, 2009 11:58 pm

Dan Kohn wrote:For some reason, I heard a lot more demand for Vanguard to offer a commodities fund last year. I wonder why?


Yea that was totally last year. Now I just wish VG would make a REALLY Long Term Treasury Bond index like the etf TLT. The current LT Treasury bond has too short of durations to really have made the 40% that TLT did last year.
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EDV

Postby Dan Kohn » Thu Jan 08, 2009 12:19 am

eurowizard, of course Vanguard came out with EDV last year, and had a 27% return, as opposed to only 18% for TLT. If they can just keep this up for a few more years, I might even buy some!

https://personal.vanguard.com/us/SecFun ... ndId2=7041
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