Why no Admiral shares on all funds?

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ronin
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Why no Admiral shares on all funds?

Post by ronin » Sat May 21, 2011 5:16 pm

Any idea why Vanguard doesn't offer Admiral shares on all their funds (at least not he funds-of-funds) especially when they offer an EFT class? Small Cap Value comes to mind as an example.

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livesoft
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Post by livesoft » Sat May 21, 2011 5:26 pm

I don't know, but I would ask the question differently: Why does Vanguard even have Investor shares on any funds?

It must cost a ton of money to keep the share classes separated, to have multiple instances of the same fund on the web site, to have all that extra time, effort, and ink going into the prospectuses. They have to spend extra time training their Crew about the differences, the expense ratios, the minimums, blah, blah, blah, and train all their clients, too. And all the extra phone calls about "When are you going to switch my shares to Admiral?" Etc.

I'd ditch the Flapshig status as well.

Note to Vanguard folks: K.I.S.S.!!!
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chipmonk
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Post by chipmonk » Sun May 22, 2011 1:06 am

livesoft wrote:I don't know, but I would ask the question differently: Why does Vanguard even have Investor shares on any funds?

It must cost a ton of money to keep the share classes separated, to have multiple instances of the same fund on the web site, to have all that extra time, effort, and ink going into the prospectuses. They have to spend extra time training their Crew about the differences, the expense ratios, the minimums, blah, blah, blah, and train all their clients, too. And all the extra phone calls about "When are you going to switch my shares to Admiral?" Etc.

I'd ditch the Flapshig status as well.

Note to Vanguard folks: K.I.S.S.!!!

Interesting... I never thought of it like this. You make a good point!

Apparently, in the early 19th century in England the postal service charged different amounts to send letters to different parts of the country based on the geographic distance between the endpoints. Postal reformers realized that much of the cost of postage was going to the administrative nightmare of figuring out how much was owed for each piece of mail, rather than actually transporting it. After reforms, postage was based on weight rather than distance, and the price dramatically decreased. Rowland Hill led these reforms.

Maybe Vanguard could decrease expenses for *everyone* (both investor and admiral shareholders) by doing something similar. Then again, I'd guess they have some very smart people working there and have already done similar calculations :)

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pteam
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Post by pteam » Sun May 22, 2011 2:04 am

chipmonk wrote:
Apparently, in the early 19th century in England the postal service charged different amounts to send letters to different parts of the country based on the geographic distance between the endpoints. Postal reformers realized that much of the cost of postage was going to the administrative nightmare of figuring out how much was owed for each piece of mail, rather than actually transporting it. After reforms, postage was based on weight rather than distance, and the price dramatically decreased. Rowland Hill led these reforms.


On another note, the postal service is now billions of dollars in debt...

RadAudit
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Post by RadAudit » Sun May 22, 2011 5:19 pm

I don't know either; but, I've got a few ideas.

I assume VG offers ETFs because it has some benefit to the fund - higher profitability and / or over all lowering of costs.

I would guess they don't offer Admiral shares on every fund because of the economies of scale of handling the necessary paperwork for the investor isn't justified by either / or the size of the individual account or the size of the fund.
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