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"Wondering how to convert to Admiral Shares?"

Posted: Thu May 04, 2017 9:13 pm
by gkaplan
If you have investments that qualify, it's easy to convert them to our lower-cost Admiral™ Shares—a separate share class of existing Vanguard mutual funds with average expense ratios that are 83% lower than the industry average.* You can have us convert them for you during one of our regular eligibility reviews or do it yourself in just a few simple steps. . . .

How to convert to Admiral Shares.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 1:25 am
by brother7
Thanks for the link.
With discipline and a little luck, I'll be doing this by year-end.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 7:01 am
by GLState
I did this a few days ago. There was a button on my "Balances and Holdings" page that said "Convert to Admiral" (or something similar) on the account that held the asset that was eligible for conversion.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 9:02 am
by PFInterest
I didn't know this needed to be said. It's a big yellow flag when it happens.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 9:24 am
by drzzzzz
Rather than giving a link, Vanguard should just do this automatically when you hit the account minimum for admiral shares - it shouldn't be a game for those in the know

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 9:29 am
by Jack FFR1846
Fidelity does this automatically when you qualify for the next class of shares. I've had this happen in my account.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 11:06 am
by GLState
drzzzzz wrote:Rather than giving a link, Vanguard should just do this automatically when you hit the account minimum for admiral shares - it shouldn't be a game for those in the know
If I remember correctly, Vanguard will, at some point, either automatically convert or perhaps just keep bugging you to convert. I don't want Vanguard to do it automatically....I sometimes have had short-term bond funds that I planned to reallocate in the future. It made little sense to go from investor, to admiral, and back to investor...and these transactions/changes would be echoed in Quicken, Mint, or whatever tracking method used.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 1:42 pm
by Good Listener
The Admiral Shares often have different prices than the investor shares. When one does a conversion, does anybody know if the computer recalculates the number of shares and price for each individual lot you bought in the past or just one bulk conversion? I'm thinking about tax basis and ease of thinking about the lots.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 1:47 pm
by jazman12
Good Listener wrote:The Admiral Shares often have different prices than the investor shares. When one does a conversion, does anybody know if the computer recalculates the number of shares and price for each individual lot you bought in the past or just one bulk conversion? I'm thinking about tax basis and ease of thinking about the lots.
prices ar the same ...expense ratio is lower

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 1:56 pm
by jhfenton
jazman12 wrote:
Good Listener wrote:The Admiral Shares often have different prices than the investor shares. When one does a conversion, does anybody know if the computer recalculates the number of shares and price for each individual lot you bought in the past or just one bulk conversion? I'm thinking about tax basis and ease of thinking about the lots.
prices ar the same ...expense ratio is lower
The share prices are not necessarily the same, and they do convert the shares and price for each individual lot (assuming you are in taxable).

Example:

VSIAX (Vanguard Small Cap Value Index Admiral) $52.51 (close yesterday)
VISVX (Vanguard Small Cap Value Index Investor) $29.30 (close yesterday)

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 3:10 pm
by drzzzzz
GLstate
Once you become admiral, Vanguard doesn't drop you to investor if your balance decreases (I believe they can, but it has not happened to me in the past and I doubt they would find it a worthwhile exercise); and no one should pay more in expenses for investor class shares when admiral have cheaper expenses - I just can't see the downside to coverting and still would advocate that Vanguard do this automatically. As mentioned by another poster they reset your shares and cost basis if the mutual fund classes are priced differently with no taxable impact from the conversion.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 3:29 pm
by telemark
Vanguard does this automatically, if you are patient. If you are not patient, you can do it manually.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 5:40 pm
by Good Listener
jazman12 wrote:
Good Listener wrote:The Admiral Shares often have different prices than the investor shares. When one does a conversion, does anybody know if the computer recalculates the number of shares and price for each individual lot you bought in the past or just one bulk conversion? I'm thinking about tax basis and ease of thinking about the lots.
prices ar the same ...expense ratio is lower
Moot

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 5:47 pm
by Geologist
Good Listener wrote:
jazman12 wrote:
Good Listener wrote:The Admiral Shares often have different prices than the investor shares. When one does a conversion, does anybody know if the computer recalculates the number of shares and price for each individual lot you bought in the past or just one bulk conversion? I'm thinking about tax basis and ease of thinking about the lots.
prices ar the same ...expense ratio is lower
Oh I see. I was looking at Total stock market Admiral vs Institutional (5 million to convert). The share price differs by 1 penny. How do you think they would handle that?
I'm sure they would convert allowing for the price difference, but an individual can't convert from Admiral to Institutional simply by having $5 million in the fund. As the fund literature says, you must also meet service criteria (you probably have to show you have institutional capacity to handle much of the recordkeeping yourself). Institutional shares are really for institutions.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 5:47 pm
by GLState
drzzzzz wrote:GLstate
Once you become admiral, Vanguard doesn't drop you to investor if your balance decreases (I believe they can, but it has not happened to me in the past and I doubt they would find it a worthwhile exercise); and no one should pay more in expenses for investor class shares when admiral have cheaper expenses - I just can't see the downside to coverting and still would advocate that Vanguard do this automatically. As mentioned by another poster they reset your shares and cost basis if the mutual fund classes are priced differently with no taxable impact from the conversion.
Vanguard won't drop you from admiral to investor if the reason in a drop in price, but they will drop immediately if you take money out to drop below $10,000. As a said, I've used short-term bond funds to hold cash. Pull cash out to fund a Roth, for example, and I would be dropped back down to Investor. Build it up again, back to Admiral. It screws up the price history and cost basis in Quicken and Mint. Saving a few basis points in expenses for a few months wasn't worth the hassle.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 5:51 pm
by Geologist
GLState wrote:
drzzzzz wrote:GLstate
Once you become admiral, Vanguard doesn't drop you to investor if your balance decreases (I believe they can, but it has not happened to me in the past and I doubt they would find it a worthwhile exercise); and no one should pay more in expenses for investor class shares when admiral have cheaper expenses - I just can't see the downside to coverting and still would advocate that Vanguard do this automatically. As mentioned by another poster they reset your shares and cost basis if the mutual fund classes are priced differently with no taxable impact from the conversion.
Vanguard won't drop you from admiral to investor if the reason in a drop in price, but they will drop immediately if you take money out. As a said, I've used short-term bond funds to hold cash. Pull cash out to fund a Roth, for example, and I would be dropped back down to Investor. Build it up again, back to Admiral. It screws up the cost basis and history in Quicken, Mint. Saving a few basis points in expenses for a few months wasn't worth the hassle.
This seems like a perfectly good reason (for both Vanguard and the shareholder) not to make Admiral conversions instantly automatic. The expense dollar savings on short periods of Admiral holdings will not be great anyway.

As another poster has pointed out, if you leave the balance above the Admiral long enough, Vanguard will convert for you.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Fri May 05, 2017 8:36 pm
by boglerdude
We need Admiral shares made available in the solo 401k

Re: "Wondering how to convert to Admiral Shares?"

Posted: Sun May 07, 2017 9:21 am
by grabiner
GLState wrote:Vanguard won't drop you from admiral to investor if the reason in a drop in price, but they will drop immediately if you take money out to drop below $10,000.
Vanguard won't drop you immediately; you will be notified that you need to get up to the Admiral level by X date or you will be demoted.

This happened to me in 2008, when I harvested a loss to go well below the Admiral level in one of my funds. I was notified later than I had two months to get over the minimun, and when I didn't do that, I dropped to Investor.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Sun May 07, 2017 10:18 am
by Doc
grabiner wrote:I was notified later ...
How much later?
Do you think the time has anything to do with your AUM at Vanguard?

Re: "Wondering how to convert to Admiral Shares?"

Posted: Sun May 07, 2017 10:30 am
by grabiner
Doc wrote:
grabiner wrote:I was notified later ...
How much later?
Do you think the time has anything to do with your AUM at Vanguard?
I sold my shares in November 2008, leaving me with about $35K left in a fund with a $100K Admiral minimum (at that time; the minimum is now $10K). I was not demoted until July 2009 and I believe I had two months' notice.

Re: "Wondering how to convert to Admiral Shares?"

Posted: Sun May 07, 2017 11:13 am
by Doc
Thanks David.