Any reason I should not pick the admiral funds equivalent?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
User avatar
walletless
Posts: 707
Joined: Fri Aug 15, 2014 4:55 pm

Any reason I should not pick the admiral funds equivalent?

Post by walletless » Tue Aug 19, 2014 3:54 pm

Background here: viewtopic.php?f=1&t=144891

In the above thread, I was suggested the LifeStrategy fund with 80/20 split instead of trying to do it myself. However, given that I am putting my money in a taxable account and want to increase my bond investments to a higher percentage as I age, I decided that a 3-fund strategy + REIT will be best for me (so I can do tax loss harvesting, pick tax advantaged bond funds, etc). I used the Vanguard recommendation tool, and it gave me this:
Image

Is there any reason why I should not use the adimiral funds equivalent for these to reduce my cost further?

User avatar
pjstack
Posts: 1308
Joined: Tue Feb 20, 2007 5:03 am
Location: Harbor City, CA

Re: Any reason I should not pick the admiral funds equivalen

Post by pjstack » Tue Aug 19, 2014 3:57 pm

In my opinion, no.
Vanguard will probably automatically convert them to Admiral status anyway.
pjstack

toto238
Posts: 1877
Joined: Wed Feb 05, 2014 2:39 am

Re: Any reason I should not pick the admiral funds equivalen

Post by toto238 » Tue Aug 19, 2014 4:02 pm

There's literally no downside for the Admiral shares vs the Investor shares.

The only one possible quirk I can think of is that if you intend on transferring those shares of the mutual fund to another institution, they other institution may not be able to hold admiral shares. They may only have investor shares.

JoshCine
Posts: 27
Joined: Fri Aug 15, 2014 5:57 pm

Re: Any reason I should not pick the admiral funds equivalen

Post by JoshCine » Tue Aug 19, 2014 11:19 pm

There is literally no reason I can think of. Only difference is you don't have to pay as much per year.

User avatar
walletless
Posts: 707
Joined: Fri Aug 15, 2014 4:55 pm

Re: Any reason I should not pick the admiral funds equivalen

Post by walletless » Tue Aug 19, 2014 11:26 pm

Cool, thanks guys! I'll setup the Admiral fund portfolio then.

User avatar
nisiprius
Advisory Board
Posts: 34311
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Any reason I should not pick the admiral funds equivalen

Post by nisiprius » Wed Aug 20, 2014 6:03 am

Wow, that's amazing. Another glitch in the tool.

Incidentally, if you have more than a $10,000 total in an Investor shares fund held at Vanguard, eventually Vanguard will automatically convert them to Admiral shares.

Basically there is NO reason not to pick Admiral shares. I can think of three very far-fetched reasons.

  • You do not want to get into any psychological state of mind where you are fussing or worrying about it. For example, you don't want your investing strategy to be influenced by trying to keep some total just over $10,000. (By the way, no, Vanguard will not "demote" Admiral shares if the only reason the total drops below $10,000 is a market movement). <--- Maybe not so, see further posting below.
  • If you have the checkwriting feature enabled on a Vanguard bond fund and it is Investor shares, and you bring the total up to just over $10,000, you would prefer not to convert them to Admiral shares because the checkbook is tied to the fund number and the fund number for Admiral shares is different and they'd need to send you a new checkbook.
  • If you were planning to keep your Vanguard mutual funds, but planning to move them away from Vanguard and hold them someplace else, there can be issues holding Admiral shares at other brokerages and glitches trying to transfer them "in kind."
Last edited by nisiprius on Wed Aug 20, 2014 12:47 pm, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

johnny847
Posts: 423
Joined: Thu Apr 10, 2014 12:08 am

Re: Any reason I should not pick the admiral funds equivalen

Post by johnny847 » Wed Aug 20, 2014 8:32 am

nisiprius wrote:[*]If you were planning to keep your Vanguard mutual funds, but planning to move them away from Vanguard and hold them someplace else, there can be issues holding Admiral shares at other brokerages and glitches trying to transfer them "in kind."


I know we're talking about far fetched reasons here, but just for fun...

In theory, if Vanguard can switch investor shares to Admiral shares, shouldn't be able to convert the other way too? I tried searching for it but the only results are for the investor to admiral direction (and for good reason)

And Vanguard can convert a mutual fund to its equivalent ETF.
Last edited by johnny847 on Wed Aug 20, 2014 8:55 am, edited 1 time in total.

bloom2708
Posts: 2912
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Any reason I should not pick the admiral funds equivalen

Post by bloom2708 » Wed Aug 20, 2014 8:47 am

With the help of the Bogleheads I have VWIUX (Investor is VWITX) in our taxable account at Vanguard.

Taxable bonds in tax-sheltered accounts. Tax-exempt bonds in taxable.

VWIUX is Intermediate-Term Tax-Exempt. It is an "actively traded" mutual fund, but it has a .12% ER.

You could consider this as an option. It would turn you into a 4 fund (with 5 actual funds)

Taxable: US, International, Int Tax-Exempt, REIT
Tax-Sheltered: US, International, Total Bond, REIT
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

User avatar
Phineas J. Whoopee
Posts: 6690
Joined: Sun Dec 18, 2011 6:18 pm

Re: Any reason I should not pick the admiral funds equivalen

Post by Phineas J. Whoopee » Wed Aug 20, 2014 12:14 pm

johnny847 wrote:...
In theory, if Vanguard can switch investor shares to Admiral shares, shouldn't be able to convert the other way too? I tried searching for it but the only results are for the investor to admiral direction (and for good reason)

And Vanguard can convert a mutual fund to its equivalent ETF.

Yes, Vanguard can and will switch Admiral to Investor shares if the reason the total value has gone below $10,000 or $50,000, depending on the fund, is the investor's redemptions rather than market movements.

Yes, Vanguard can and will convert Investor or Admiral shares to the ETF as a non-taxable event, upon request of the customer. They will not convert in the opposite direction. I don't know whether they can. Please keep in mind they're staying within their patented method of offering ETFs as a share class of otherwise non-ETF mutual funds, which may imply restrictions beyond what laws allow.

PJW

User avatar
InvestorNewb
Posts: 1570
Joined: Mon Sep 03, 2012 11:27 am

Re: Any reason I should not pick the admiral funds equivalen

Post by InvestorNewb » Wed Aug 20, 2014 12:19 pm

You can also buy the ETFs which have the same MERs as the admiral class. That's what I do.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

User avatar
nisiprius
Advisory Board
Posts: 34311
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Any reason I should not pick the admiral funds equivalen

Post by nisiprius » Wed Aug 20, 2014 12:51 pm

:oops: Thanks to sscritic for sending me a PM pointing out to me that I goofed. I said Vanguard does not "demote" Admiral merely because of market movements. In fact, the prospectus for Vanguard 500 Index Fund (see p. 26) and probably all the others says:
Mandatory Conversions to Investor Shares

If an account no longer meets the balance requirements for Admiral Shares, Vanguard may automatically convert the shares in the account to Investor Shares. A decline in the account balance because of market movement may result in such a conversion. Vanguard will notify the investor in writing before any mandatory conversion occurs.
So they definitely do reserve the right to do it, though I don't think anyone has ever posted in this forum saying it has happened.
Last edited by nisiprius on Wed Aug 20, 2014 1:08 pm, edited 1 time in total.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

technovelist
Posts: 2658
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

Re: Any reason I should not pick the admiral funds equivalen

Post by technovelist » Wed Aug 20, 2014 1:05 pm

nisiprius wrote:Wow, that's amazing. Another glitch in the tool.

Incidentally, if you have more than a $10,000 total in an Investor shares fund held at Vanguard, eventually Vanguard will automatically convert them to Admiral shares.

Basically there is NO reason not to pick Admiral shares. I can think of three very far-fetched reasons.

  • You do not want to get into any psychological state of mind where you are fussing or worrying about it. For example, you don't want your investing strategy to be influenced by trying to keep some total just over $10,000. (By the way, no, Vanguard will not "demote" Admiral shares if the only reason the total drops below $10,000 is a market movement). <--- Maybe not so, see further posting below.
  • If you have the checkwriting feature enabled on a Vanguard bond fund and it is Investor shares, and you bring the total up to just over $10,000, you would prefer not to convert them to Admiral shares because the checkbook is tied to the fund number and the fund number for Admiral shares is different and they'd need to send you a new checkbook.
  • If you were planning to keep your Vanguard mutual funds, but planning to move them away from Vanguard and hold them someplace else, there can be issues holding Admiral shares at other brokerages and glitches trying to transfer them "in kind."


Oh, come on. Surely you can think of more far-fetched reasons than that!

For example, someone might have a very negative reaction to anything referring to the sea, so they wouldn't want to have Admiral shares.

Ok, that's my contribution. Who else has something even more far-fetched?
In theory, theory and practice are identical. In practice, they often differ.

toto238
Posts: 1877
Joined: Wed Feb 05, 2014 2:39 am

Re: Any reason I should not pick the admiral funds equivalen

Post by toto238 » Wed Aug 20, 2014 1:09 pm

Well there's always the "Wait, but I had investor shares! This is different! I don't like different! I don't trust you. Don't change it!"

I imagine there's more than one person with that attitude that gives up this freebie.

User avatar
Epsilon Delta
Posts: 6548
Joined: Thu Apr 28, 2011 7:00 pm

Re: Any reason I should not pick the admiral funds equivalen

Post by Epsilon Delta » Wed Aug 20, 2014 1:18 pm

Has anybody tried an initial purchase of investor shares for an amount over the admiral minimum? I would be surprised if Vanguard did not upgrade immediately.

As far as downgrading when you go below the minimum. I've had it happen as a result of selling shares but it took almost a year and I got several letters warning me of the impending event.

User avatar
nisiprius
Advisory Board
Posts: 34311
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Any reason I should not pick the admiral funds equivalen

Post by nisiprius » Wed Aug 20, 2014 1:19 pm

technovelist wrote:For example, someone might have a very negative reaction to anything referring to the sea, so they wouldn't want to have Admiral shares.

Ok, that's my contribution. Who else has something even more far-fetched?
"I've memorized all of the fund numbers and ticker symbols and don't want to have to memorize new ones."
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

User avatar
InvestorNewb
Posts: 1570
Joined: Mon Sep 03, 2012 11:27 am

Re: Any reason I should not pick the admiral funds equivalen

Post by InvestorNewb » Wed Aug 20, 2014 1:26 pm

technovelist wrote:Ok, that's my contribution. Who else has something even more far-fetched?

- Perhaps the investor wants to feel 'on the same level' and be able to relate to his friends, so he invests in the investor shares. (doesn't want to have the ability to brag)
or
- He is afraid of giving clues to his significant other about his net worth, and doesn't want "admiral" to show up at the top of their statements. (can quickly conceal from wife)
or
- Two siblings invest in Vanguard, and sibling A with >10k doesn't want sibling B with <10K to feel left out, so they both invest in the same class together.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

User avatar
Phineas J. Whoopee
Posts: 6690
Joined: Sun Dec 18, 2011 6:18 pm

Re: Any reason I should not pick the admiral funds equivalen

Post by Phineas J. Whoopee » Wed Aug 20, 2014 1:33 pm

nisiprius wrote:
technovelist wrote:For example, someone might have a very negative reaction to anything referring to the sea, so they wouldn't want to have Admiral shares.

Ok, that's my contribution. Who else has something even more far-fetched?
"I've memorized all of the fund numbers and ticker symbols and don't want to have to memorize new ones."

"I'm intentionally working against my family's financial self-interest so my community property state spouse, whom I hate more than anybody, will be financially damaged, keeping in mind I'm ignorant of the fact I can buy mutual funds with huge loads and expenses, or, preferably, classic vehicles in which I can get into one-car wrecks."
PJW

dpc
Posts: 379
Joined: Sat Aug 27, 2011 1:41 pm

Re: Any reason I should not pick the admiral funds equivalen

Post by dpc » Wed Aug 20, 2014 1:48 pm

One surprise I got was that Vanguard will not allow Admiral funds in a SIMPLE IRA. Didn't see that one coming. Something about management expenses for the SIMPLE IRA were higher than other tax-advantaged accounts.
"Worrying is like paying interest on a debt that you might never owe" -- Will Rogers

Flexo52
Posts: 15
Joined: Thu Jan 02, 2014 10:59 am

Re: Any reason I should not pick the admiral funds equivalen

Post by Flexo52 » Wed Aug 20, 2014 5:35 pm

As far as I know there are no admiral target date or lifestyle funds.

Someone who wants an all in one fund might find the added expense worth it.

Post Reply