Vanguard Lowers 21 ETF Expense Ratios

[livesoft]

@Gleevec, I am no uber-fan of Vanguard and don't have a lot of money invested with them. I don't think anyone on this forum can legitimately accuse me of giving Vanguard a pass. Just ask around.

Your seriously paragraph was spot on.

[Gleevec]

@Gleevec, I am no uber-fan of Vanguard and don't have a lot of money invested with them. I don't think anyone on this forum can legitimately accuse me of giving Vanguard a pass. Just ask around.

Your seriously paragraph was spot on.

Point well taken, as an aside its rare on the internet nowadays to find a reasonable center (when do people ever agree 100%, even in real life?) when its so easy to just huddle in an echo-chamber at an extreme, so wanted to thank you on that front

[Mike14]

I believe this has happened in the past where the ETF had a lower ER than Admiral shares.

ETF's are cheaper for Vanguard because a large portion of their ETF's are held outside of Vanguard, meaning another firm is providing customer support, mailing tax documents, etc.

I'd say in another year or so mutual funds will follow.

[gjlynch17]

Does anyone have experience converting Vanguard mutual funds to the corresponding ETF using the tax free conversion feature available through Vanguard brokerage?

Is the process done at the closing price so that there is no spread gain or loss?

Also, can one request it via the web site? Or do you have to call them to initiate?

Thanks,

Kalo

I recently converted some mutual funds to ETFs. Unfortunately, you need to call Vanguard as there is no option to convert to ETFs online. The funds are converted at the closing day NAV (not price of the ETF). There is no bid/ask spread One recommendation that I picked up from this Board is if you are converting funds in a taxable account, take a screenshot of your cost basis. Vanguard messed up my cost basis calculation on the conversion to ETFs and having a screenshot of the cost basis of the mutual funds was helpful in fixing it.

Good luck!

[deltaneutral83]

I believe I read it correctly in my new prospectus on VIOV (Small cap value 600, same as IJS) that is going from 20 to 15 bps as well?

[MnD]

“Seriously” though, the direction Vanguard is heading, to become a ETF vendor with rock bottom prices, is very different than the company many of us started out with who looked to Vanguard as our financial home for recurring admiral mutual fund purchases, checking with Advantage, and access to Flagship rep for the issues for which there are almost no in person offices. I spent a good amount of time 5 years ago trying to convince my company to goto Vanguard for our retirement accounts but was told they are hard to interface with for the needs of the employees, I didn’t expect them to be so prescient.

This post just reminds me what Vanguard’s new goals are, to become an ETF wholesaler, it’s too bad for some of us

I make a habit (only when investing comes up at a topic) to ask younger people where they invest outside of workplace plans. It's some Schwab and Fidelity and a whole host of newer fintech companies - many I've never heard of. A fair share have banking and investing at one shop. Not once have I heard a younger person having chosen a Vanguard account as a base for their non-workplace investing. Criteria revolve around mobile apps, data aggregation, 24/7 everything, instant updating/automation, robo-advice ect. As far as the retail investor, I'd say the handwriting has been on the wall for a long time where Vanguard is heading and that's for the exits.

[UpperNwGuy]

“Seriously” though, the direction Vanguard is heading, to become a ETF vendor with rock bottom prices, is very different than the company many of us started out with who looked to Vanguard as our financial home for recurring admiral mutual fund purchases, checking with Advantage, and access to Flagship rep for the issues for which there are almost no in person offices. I spent a good amount of time 5 years ago trying to convince my company to goto Vanguard for our retirement accounts but was told they are hard to interface with for the needs of the employees, I didn’t expect them to be so prescient.

This post just reminds me what Vanguard’s new goals are, to become an ETF wholesaler, it’s too bad for some of us

I make a habit (only when investing comes up at a topic) to ask younger people where they invest outside of workplace plans. It's some Schwab and Fidelity and a whole host of newer fintech companies - many I've never heard of. A fair share have banking and investing at one shop. Not once have I heard a younger person having chosen a Vanguard account as a base for their non-workplace investing. Criteria revolve around mobile apps, data aggregation, 24/7 everything, instant updating/automation, robo-advice ect. As far as the retail investor, I'd say the handwriting has been on the wall for a long time where Vanguard is heading and that's for the exits.

My son recently chose Fidelity over Vanguard for his taxable account for the reasons you gave.

[donaldfair71]

“Seriously” though, the direction Vanguard is heading, to become a ETF vendor with rock bottom prices, is very different than the company many of us started out with who looked to Vanguard as our financial home for recurring admiral mutual fund purchases, checking with Advantage, and access to Flagship rep for the issues for which there are almost no in person offices. I spent a good amount of time 5 years ago trying to convince my company to goto Vanguard for our retirement accounts but was told they are hard to interface with for the needs of the employees, I didn’t expect them to be so prescient.

This post just reminds me what Vanguard’s new goals are, to become an ETF wholesaler, it’s too bad for some of us

I make a habit (only when investing comes up at a topic) to ask younger people where they invest outside of workplace plans. It's some Schwab and Fidelity and a whole host of newer fintech companies - many I've never heard of. A fair share have banking and investing at one shop. Not once have I heard a younger person having chosen a Vanguard account as a base for their non-workplace investing. Criteria revolve around mobile apps, data aggregation, 24/7 everything, instant updating/automation, robo-advice ect. As far as the retail investor, I'd say the handwriting has been on the wall for a long time where Vanguard is heading and that's for the exits.

Keep in mind that people can still invest in VG funds without using the Vanguard site. I know more than a few young folk who use Motif/M1/Betterment/etc and still purchase primarily Vanguard funds through them if you ask them what they invest in.

I have all my MF/ETF in Vanguard funds. But only about 20% through the actual Vanguard site. About 75% through my 403b, and about 5% in my taxable account at M1 Finance.

[MnD]

“Seriously” though, the direction Vanguard is heading, to become a ETF vendor with rock bottom prices, is very different than the company many of us started out with who looked to Vanguard as our financial home for recurring admiral mutual fund purchases, checking with Advantage, and access to Flagship rep for the issues for which there are almost no in person offices. I spent a good amount of time 5 years ago trying to convince my company to goto Vanguard for our retirement accounts but was told they are hard to interface with for the needs of the employees, I didn’t expect them to be so prescient.

This post just reminds me what Vanguard’s new goals are, to become an ETF wholesaler, it’s too bad for some of us

I make a habit (only when investing comes up at a topic) to ask younger people where they invest outside of workplace plans. It's some Schwab and Fidelity and a whole host of newer fintech companies - many I've never heard of. A fair share have banking and investing at one shop. Not once have I heard a younger person having chosen a Vanguard account as a base for their non-workplace investing. Criteria revolve around mobile apps, data aggregation, 24/7 everything, instant updating/automation, robo-advice ect. As far as the retail investor, I'd say the handwriting has been on the wall for a long time where Vanguard is heading and that's for the exits.

Keep in mind that people can still invest in VG funds without using the Vanguard site. I know more than a few young folk who use Motif/M1/Betterment/etc and still purchase primarily Vanguard funds through them if you ask them what they invest in.

I have all my MF/ETF in Vanguard funds. But only about 20% through the actual Vanguard site. About 75% through my 403b, and about 5% in my taxable account at M1 Finance.

Absolutely and also through workplace plans. Younger folks aren't at all adverse to Vanguard funds/Etf's - just not in the running for where to open/have accounts.

[UpperNwGuy]

“Seriously” though, the direction Vanguard is heading, to become a ETF vendor with rock bottom prices, is very different than the company many of us started out with who looked to Vanguard as our financial home for recurring admiral mutual fund purchases, checking with Advantage, and access to Flagship rep for the issues for which there are almost no in person offices. I spent a good amount of time 5 years ago trying to convince my company to goto Vanguard for our retirement accounts but was told they are hard to interface with for the needs of the employees, I didn’t expect them to be so prescient.

This post just reminds me what Vanguard’s new goals are, to become an ETF wholesaler, it’s too bad for some of us

I make a habit (only when investing comes up at a topic) to ask younger people where they invest outside of workplace plans. It's some Schwab and Fidelity and a whole host of newer fintech companies - many I've never heard of. A fair share have banking and investing at one shop. Not once have I heard a younger person having chosen a Vanguard account as a base for their non-workplace investing. Criteria revolve around mobile apps, data aggregation, 24/7 everything, instant updating/automation, robo-advice ect. As far as the retail investor, I'd say the handwriting has been on the wall for a long time where Vanguard is heading and that's for the exits.

Keep in mind that people can still invest in VG funds without using the Vanguard site. I know more than a few young folk who use Motif/M1/Betterment/etc and still purchase primarily Vanguard funds through them if you ask them what they invest in.

I have all my MF/ETF in Vanguard funds. But only about 20% through the actual Vanguard site. About 75% through my 403b, and about 5% in my taxable account at M1 Finance.

You've introduced two added complexities that would not appeal to young folk: ETFs and outside brokers. When my son made his recent decision, he limited his choices to Vanguard mutual funds at Vanguard and Fidelity mutual funds at Fidelity. He wanted to keep it simple, so no ETFs and no outside brokers.

[donaldfair71]

“Seriously” though, the direction Vanguard is heading, to become a ETF vendor with rock bottom prices, is very different than the company many of us started out with who looked to Vanguard as our financial home for recurring admiral mutual fund purchases, checking with Advantage, and access to Flagship rep for the issues for which there are almost no in person offices. I spent a good amount of time 5 years ago trying to convince my company to goto Vanguard for our retirement accounts but was told they are hard to interface with for the needs of the employees, I didn’t expect them to be so prescient.

This post just reminds me what Vanguard’s new goals are, to become an ETF wholesaler, it’s too bad for some of us

I make a habit (only when investing comes up at a topic) to ask younger people where they invest outside of workplace plans. It's some Schwab and Fidelity and a whole host of newer fintech companies - many I've never heard of. A fair share have banking and investing at one shop. Not once have I heard a younger person having chosen a Vanguard account as a base for their non-workplace investing. Criteria revolve around mobile apps, data aggregation, 24/7 everything, instant updating/automation, robo-advice ect. As far as the retail investor, I'd say the handwriting has been on the wall for a long time where Vanguard is heading and that's for the exits.

Keep in mind that people can still invest in VG funds without using the Vanguard site. I know more than a few young folk who use Motif/M1/Betterment/etc and still purchase primarily Vanguard funds through them if you ask them what they invest in.

I have all my MF/ETF in Vanguard funds. But only about 20% through the actual Vanguard site. About 75% through my 403b, and about 5% in my taxable account at M1 Finance.

You've introduced two added complexities that would not appeal to young folk: ETFs and outside brokers. When my son made his recent decision, he limited his choices to Vanguard mutual funds at Vanguard and Fidelity mutual funds at Fidelity. He wanted to keep it simple, so no ETFs and no outside brokers.

No doubt, but your son has already done more background than more than most people will want to do, or have done. I imagine having a Boglehead father/mother (I don't assume) helped with that, but believe it or not, we're a very small sliver of the investing public.

[Nate79]

“Seriously” though, the direction Vanguard is heading, to become a ETF vendor with rock bottom prices, is very different than the company many of us started out with who looked to Vanguard as our financial home for recurring admiral mutual fund purchases, checking with Advantage, and access to Flagship rep for the issues for which there are almost no in person offices. I spent a good amount of time 5 years ago trying to convince my company to goto Vanguard for our retirement accounts but was told they are hard to interface with for the needs of the employees, I didn’t expect them to be so prescient.

This post just reminds me what Vanguard’s new goals are, to become an ETF wholesaler, it’s too bad for some of us

I make a habit (only when investing comes up at a topic) to ask younger people where they invest outside of workplace plans. It's some Schwab and Fidelity and a whole host of newer fintech companies - many I've never heard of. A fair share have banking and investing at one shop. Not once have I heard a younger person having chosen a Vanguard account as a base for their non-workplace investing. Criteria revolve around mobile apps, data aggregation, 24/7 everything, instant updating/automation, robo-advice ect. As far as the retail investor, I'd say the handwriting has been on the wall for a long time where Vanguard is heading and that's for the exits.

Keep in mind that people can still invest in VG funds without using the Vanguard site. I know more than a few young folk who use Motif/M1/Betterment/etc and still purchase primarily Vanguard funds through them if you ask them what they invest in.

I have all my MF/ETF in Vanguard funds. But only about 20% through the actual Vanguard site. About 75% through my 403b, and about 5% in my taxable account at M1 Finance.

You've introduced two added complexities that would not appeal to young folk: ETFs and outside brokers. When my son made his recent decision, he limited his choices to Vanguard mutual funds at Vanguard and Fidelity mutual funds at Fidelity. He wanted to keep it simple, so no ETFs and no outside brokers.

Mutual funds are for old fogies, old school idea that young people could care less about. ETFs, high tech brokers, robo advisors, app investing etc are what are drawing in the younger generation. Even on Bogleheads there seems to be a huge shift in increased interest in ETFs and alternative brokers vs Vanguard and mutual funds.

[jhfenton]

Does anyone have experience converting Vanguard mutual funds to the corresponding ETF using the tax free conversion feature available through Vanguard brokerage?

Is the process done at the closing price so that there is no spread gain or loss?

Also, can one request it via the web site? Or do you have to call them to initiate?

Thanks,

Kalo

I recently converted some mutual funds to ETFs. Unfortunately, you need to call Vanguard as there is no option to convert to ETFs online. The funds are converted at the closing day NAV (not price of the ETF). There is no bid/ask spread One recommendation that I picked up from this Board is if you are converting funds in a taxable account, take a screenshot of your cost basis. Vanguard messed up my cost basis calculation on the conversion to ETFs and having a screenshot of the cost basis of the mutual funds was helpful in fixing it.

Good luck!

gjlynch17 is correct on all counts. I've done it many times. You have to call to make the conversion, and they do the conversion as if you are selling the mutual fund shares at the close and buying the ETF at its closing NAV. So within a rounding error, it won't matter what day you call and make the conversion, because the ratio of the mutual fund NAV and the ETF NAV are constant.

They will advise you that your mutual fund shares will disappear for one day, and your ETF shares will appear the following day. So if you call today before 4 PM, the conversion will be done at this evening's closing NAVs; your mutual fund shares will be gone tomorrow morning; and your new ETF shares will appear Thursday morning.

[donaldfair71]

“Seriously” though, the direction Vanguard is heading, to become a ETF vendor with rock bottom prices, is very different than the company many of us started out with who looked to Vanguard as our financial home for recurring admiral mutual fund purchases, checking with Advantage, and access to Flagship rep for the issues for which there are almost no in person offices. I spent a good amount of time 5 years ago trying to convince my company to goto Vanguard for our retirement accounts but was told they are hard to interface with for the needs of the employees, I didn’t expect them to be so prescient.

This post just reminds me what Vanguard’s new goals are, to become an ETF wholesaler, it’s too bad for some of us

I make a habit (only when investing comes up at a topic) to ask younger people where they invest outside of workplace plans. It's some Schwab and Fidelity and a whole host of newer fintech companies - many I've never heard of. A fair share have banking and investing at one shop. Not once have I heard a younger person having chosen a Vanguard account as a base for their non-workplace investing. Criteria revolve around mobile apps, data aggregation, 24/7 everything, instant updating/automation, robo-advice ect. As far as the retail investor, I'd say the handwriting has been on the wall for a long time where Vanguard is heading and that's for the exits.

Keep in mind that people can still invest in VG funds without using the Vanguard site. I know more than a few young folk who use Motif/M1/Betterment/etc and still purchase primarily Vanguard funds through them if you ask them what they invest in.

I have all my MF/ETF in Vanguard funds. But only about 20% through the actual Vanguard site. About 75% through my 403b, and about 5% in my taxable account at M1 Finance.

You've introduced two added complexities that would not appeal to young folk: ETFs and outside brokers. When my son made his recent decision, he limited his choices to Vanguard mutual funds at Vanguard and Fidelity mutual funds at Fidelity. He wanted to keep it simple, so no ETFs and no outside brokers.

Mutual funds are for old fogies, old school idea that young people could care less about. ETFs, high tech brokers, robo advisors, app investing etc are what are drawing in the younger generation. Even on Bogleheads there seems to be a huge shift in increased interest in ETFs and alternative brokers vs Vanguard and mutual funds.

I wouldn't use this terminology exactly, but this sentiment is one I see prevalent among the high school kids I teach PF to.

You can get them on the saving thing, the low cost thing, the diversification thing. But it had better be on a platform they feel like they are "hip" using, something they can tell people about.

I will try to steer my own kids from that mindset. Maybe baby steps to financial awareness is the answer?

[snowman]

“Seriously” though, the direction Vanguard is heading, to become a ETF vendor with rock bottom prices, is very different than the company many of us started out with who looked to Vanguard as our financial home for recurring admiral mutual fund purchases, checking with Advantage, and access to Flagship rep for the issues for which there are almost no in person offices. I spent a good amount of time 5 years ago trying to convince my company to goto Vanguard for our retirement accounts but was told they are hard to interface with for the needs of the employees, I didn’t expect them to be so prescient.

This post just reminds me what Vanguard’s new goals are, to become an ETF wholesaler, it’s too bad for some of us

I make a habit (only when investing comes up at a topic) to ask younger people where they invest outside of workplace plans. It's some Schwab and Fidelity and a whole host of newer fintech companies - many I've never heard of. A fair share have banking and investing at one shop. Not once have I heard a younger person having chosen a Vanguard account as a base for their non-workplace investing. Criteria revolve around mobile apps, data aggregation, 24/7 everything, instant updating/automation, robo-advice ect. As far as the retail investor, I'd say the handwriting has been on the wall for a long time where Vanguard is heading and that's for the exits.

I have to agree with MnD. I am an outlier here as I have never owned MF outside of 401k (which was many years ago), always owned ETFs only (starting with SPY back in the 90s). I taught my kids to invest in ETFs as that was the only low cost option available if you were starting from zero and had very small amounts of money to invest.

Kids are now adults and have no problem buying ETFs. They don't think it's complicated, they think it's accurate as they know exactly how much they are paying. They do almost everything on their phones, so app execution is critical, as is 24/7 accessibility. They want instant updates/alerts on everything, and when I say instant I do mean instant. Data aggregation is very important too, and they don't like my excel spreadsheet anymore. Everything needs to be automated so they can focus on other, non-financial things.

It's a very different world from ours. In that regard, VG is behind but catching up, and it will make many older BHs used to accumulate Admiral shares very uncomfortable. At least that's the way I see it based on my limited personal experience.

Edit to add: they also have no need for paper checks, and they don't want to call CS, they want online chat option. That's another strike against VG, unfortunately.

[jeffyscott]

Edit to add: they also have no need for paper checks, and they don't want to call CS, they want online chat option. That's another strike against VG, unfortunately.

Well, I am an old fogey using mutual funds, but agree on that to some extent. I could do without checks. We use very few checks and could probably manage with none, if we did not happen to have a stockpile of hundreds of them.

Phone calls are an absolute last resort. For most things I'm satisfied with sending a message online, though. And don't respond with "please call us" . I'm always surprised when I read postings here about calling, calling, calling, whether it be Vanguard, Schwab, Fidelity, credit card companies, banks, or whatever. I think "why would you do that, when you could just send them a message" (or chat)?

[hansatsu]

Note that Vanguard "institutional" class shares ($5 million minimum) generally have the same if not lower expense ratio compared to these reduced ETFs.

e.g.
VTI (Total Stock Market ETF) - 0.03%
VITSX (Total Stock Market Index Fund Institutional Shares) - 0.03%

VXUS (Total International Stock ETF) - 0.09%
VTSNX (Total International Stock Index Fund Institutional Shares) - 0.08%

[J G Bankerton]

[merged this topic and its replies into the existing thread - moderator prudent]

I just noticed the reduced fees. It just keeps getting better; it's not what you make, it is what you keep.

[pokebowl]

Add me to the list of those who took the carrot. Just got off the phone with Vanguard to convert all my accounts' admiral holdings to their ETF equivalents. I left a small portion of the cheapest of the admiral funds in my retirement accounts as a collection point for leftover cash. Hope Vanguard knows what they are doing, as of now in the long run this makes my accounts very portable and easy to move about to other brokerages should I choose.

If Fidelity ZERO funds stick around for several years with no drastic changes, then I see a potential next move for my retirement accounts in the future.

[KyleAAA]

Sweet. Hopefully iShares will follow.

[KyleAAA]

It's what you make, too.

[LittleD]

I don't want to hijack the thread but, Schwab probably has something to do with Vanguard lowering their fees. Now if you want cheap Schwab Index Funds with very low expenses take a look at these: If you still like Mutual Funds that is.

SWLGX Large Cap Growth Index .02 expense ratio
SWPPX S&P500 Index .03
SNSFX Schwab 1000 Index .05
SWMCX Mid-Cap Index .03
SWSSX Small Cap Index .05
SWLVX Large Cap Value Index .02
SWAGX Agg. Bond Index .04
SWISX International Index .06
SWTSX Total Market Index .03

[ohai]

I hope you're making more than the 0.02% savings from this change.

[southerndoc]

People thought I was crazy in another thread for the difference in 0.03/0.04% ER vs Fidelity's Zero funds.

So, Vanguard ETF's have lower ER's than their Admiral funds? I don't see this lasting long. Either Vanguard will lower their Admiral fund ER's or they will start pushing ETF's over funds.

[jhfenton]

People thought I was crazy in another thread for the difference in 0.03/0.04% ER vs Fidelity's Zero funds.

So, Vanguard ETF's have lower ER's than their Admiral funds? I don't see this lasting long. Either Vanguard will lower their Admiral fund ER's or they will start pushing ETF's over funds.

Oh, I don't know if I would use the word "pushing," but lower ETF ER's are almost certainly here to stay.

[linenfort]

For Vanguard ETFs vs mutual funds, I think the main reason to choose one over the other is not expense ratio, not tax-efficiency, not Vanguard, but instead it has to do with investor personality: Can you buy ETF shares without feeling regret that you possibly could have gotten a better price a few minutes later?
...

When I look at Vanguard ETFs, and the premium/discount is a premium, I pause. "Should I think on this further?"
When I look at fund shares: Time to get the asset allocation back in order. (Click)

In any case, Vanguard ERs are the one cost that goes down in my life. They are near zero. Even 0.05% is amazingly cheap.
$5 on every $10,000?

[J G Bankerton]

Vanguard wants everyone to have a brokerage account. The only way to get lower fees is to own ETFs and that requires a brokerage account. What happens if everyone sells the fund and buys ETF? I assume with Vanguard's patent on ETFs it won't have an effect.

Low fees for "retail" investors and unlimited free trades for ETF keeps me close to matching the market. A no lose situation.