Admiral Shares

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woodedareas
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Admiral Shares

Post by woodedareas » Thu Aug 27, 2015 6:33 am

What is the purpose and benefit of Admiral shares?

Iorek
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Re: Admiral Shares

Post by Iorek » Thu Aug 27, 2015 6:34 am

lower fees

livesoft
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Re: Admiral Shares

Post by livesoft » Thu Aug 27, 2015 6:37 am

I think they nudge Vanguard clients into putting more money into Vanguard, too.

I think a better question to ask is: What is the purpose of Investor Shares? After all, it costs Vanguard money to have extra share classes (two of everything on the web site, in the prospectus, extra ticker symbols, etc). Vanguard got rid of the Signal share class in a wise move. Maybe they will get rid of the Investor share class next?
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rkhusky
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Re: Admiral Shares

Post by rkhusky » Thu Aug 27, 2015 7:19 am

livesoft wrote: Maybe they will get rid of the Investor share class next?
Except for a few entry level funds and those that don't have Admiral shares, that might make sense.

livesoft
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Re: Admiral Shares

Post by livesoft » Thu Aug 27, 2015 7:21 am

It would not go over too well, but Vanguard could have only Admiral share class for ALL funds and charge a 0.1% low-minimum-account-value fee.
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lack_ey
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Re: Admiral Shares

Post by lack_ey » Thu Aug 27, 2015 7:31 am

I think from other brokerages you usually only get access to investor shares (and obviously the ETFs)?

Vanguard already offers 1-2 institutional share classes in addition to admiral and investor for many funds. Getting rid of investor class wouldn't be all that much simpler. And many of the funds have pretty high AUM in investor class, which at around a typical 10 bp difference makes a lot of money.

texasdiver
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Re: Admiral Shares

Post by texasdiver » Thu Aug 27, 2015 8:34 am

They also use only investor shares in many of their 401k and 403b plans, at least those directly managed by Vanguard. I called Vanguard and asked about that for my 403b plan which is directly administered by Vanguard when I noticed that the shares stayed investor shares and didn't convert to Admiral Shares as my account balance rose like it does for IRAs. What they told me was that they used investor shares for 403b plans because there are higher administrative costs associated with those plans than for IRAs and that was how they recapture the costs instead of adding other fees like many other institutions do. They also told me that they can't have a variable fee based on account size in 401k and 403b plans because that would violate the laws that set up 401k and 403b plans which require that all account holders be treated equally regardless of salary or account size.

So even if they dropped Investor Shares for IRA and ordinary taxable accounts I expect they would want to keep the share class for their 401k and 403b accounts and so still would be dealing with all the costs of managing two different share classes.

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