More funds getting Admiral shares

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Sunny Sarkar
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More funds getting Admiral shares

Post by Sunny Sarkar » Thu Aug 11, 2011 9:56 am

It keeps getting better...
Vanguard wrote:Once again, we're reducing the cost of investing.

Starting in September, Vanguard expects to offer lower-cost Admiral™ Shares for six more domestic and international stock index funds:

Developed Markets Index Fund 0.12%
FTSE All-World ex-US Index Fund 0.18%
Mid-Cap Growth Index Fund 0.10%
Mid-Cap Value Index Fund 0.10%
Small-Cap Growth Index Fund 0.10%
Small-Cap Value Index Fund 0.21%
Link: Introducing lower-cost Admiral Shares for more index funds
"Cost matters". "Stay the course". "Press on, regardless". ― John C. Bogle

YDNAL
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Re: More funds getting Admiral shares

Post by YDNAL » Thu Aug 11, 2011 10:25 am

Sunny Sarkar wrote:It keeps getting better...
Vanguard wrote:Once again, we're reducing the cost of investing.

Starting in September, Vanguard expects to offer lower-cost Admiral™ Shares for six more domestic and international stock index funds:

Developed Markets Index Fund 0.12%
FTSE All-World ex-US Index Fund 0.18%
Mid-Cap Growth Index Fund 0.10%
Mid-Cap Value Index Fund 0.10%
Small-Cap Growth Index Fund 0.10%
Small-Cap Value Index Fund 0.21%
Link: Introducing lower-cost Admiral Shares for more index funds
Yes!

Here

Here
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Sunny Sarkar
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Post by Sunny Sarkar » Thu Aug 11, 2011 11:10 am

Question for Taylor:

0.20% - Total International Stock Index Fund Admiral Shares
0.18% - FTSE All-World ex-US Index Fund Admiral Shares

Should the 4-fund portfolio now officially switch from the Total International fund to the All-World ex-US fund for
(1) lower cost and
(2) higher diversification (Canada)?
"Cost matters". "Stay the course". "Press on, regardless". ― John C. Bogle

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Boglenaut
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Post by Boglenaut » Thu Aug 11, 2011 11:32 am

Sunny Sarkar wrote:Question for Taylor:

Should the 4-fund portfolio now officially switch from the Total International fund to the All-World ex-US fund for
(1) lower cost and
(2) higher diversification (Canada)?
I am not Taylor, but Total International seems the better choice to me. It HAS Canada, EM and Small Cap. The FTSE fund does not have small cap and you would need to add the complementry fund to it in the correct proportion. Total International also has almost three times the number of holdings.

I do not think fees would be far apart once you account for the FTSE small cap ER.
Last edited by Boglenaut on Thu Aug 11, 2011 11:39 am, edited 1 time in total.

maxinout
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Post by maxinout » Thu Aug 11, 2011 12:07 pm

Every time I see one of these posts, I'm hoping Total World will be mentioned.

I like the idea of the fund, but hate the costs associated with it.

Ah well, maybe someday.

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Taylor Larimore
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Post by Taylor Larimore » Thu Aug 11, 2011 12:59 pm

Sunny Sarkar wrote:Question for Taylor:

0.20% - Total International Stock Index Fund Admiral Shares
0.18% - FTSE All-World ex-US Index Fund Admiral Shares

Should the 4-fund portfolio now officially switch from the Total International fund to the All-World ex-US fund for the reasons given by Boglenaut and
(1) lower cost and
(2) higher diversification (Canada)?
Hi Sunny:

I think both these funds are excellent international funds. A few one-hundred's of a percent expense ratio is meaningless compared with a fund's other qualities.

I slightly prefer Total International for the reasons given by Boglenaut and pwm.

There is more than one road to Dublin
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manuvns
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Post by manuvns » Thu Aug 11, 2011 2:35 pm

still waiting for admiral series of target date fund . here is the response from vanguard .

Vanguard cannot offer separate share classes for any of our fund-of-funds
per SEC regulations. Investment companies who do offer additional share
classes for a fund-of-fund structure are able to do so because they charge
additional fees on top of the weighted average of the underlying funds'
expense ratios. Vanguard does not assess any additional management fees and
therefore, could not offer a "Target Retirement 2010 Fund Admiral Shares,"
for example.

It is possible, however, for Vanguard's fund-of-funds to invest into the
Admiral Shares versus the Investor Shares that currently make up its
portfolio. Vanguard is continuously monitoring fund expenses and your
feedback regarding the fund-of-funds investing into lower cost Admiral
Shares has been forwarded to Vanguard's management team.

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Post by ftobin » Thu Aug 11, 2011 3:47 pm

pwm112 wrote:Should the 4-fund portfolio now officially switch from the Total International fund to the All-World ex-US fund for
(1) lower cost and
(2) higher diversification (Canada)?
I'll point out that at the price VEU trades at, the 0.02% difference in ER is equivalent to a only 1 penny in share price. In other words, smart trading to get a better price could easily overwhelm any ER.

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rob
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Post by rob » Thu Aug 11, 2011 4:15 pm

I am still at a loss of why the adm shares were dropped to 10K..... It's certainly helped me since a promotion from bilge rat to admiral is great and all.... but with a 3K minimum and a 10K admiral.... There is only a 7K band difference.

I understand Vanguard will know it's costs and the distribution of accounts and all that.... but seems something like 50K would have made more sense from 100k then just 10k.....
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien

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Sunny Sarkar
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Post by Sunny Sarkar » Thu Aug 11, 2011 4:28 pm

Taylor Larimore wrote:
Sunny Sarkar wrote:Question for Taylor:

0.20% - Total International Stock Index Fund Admiral Shares
0.18% - FTSE All-World ex-US Index Fund Admiral Shares

Should the 4-fund portfolio now officially switch from the Total International fund to the All-World ex-US fund for the reasons given by Boglenaut and
(1) lower cost and
(2) higher diversification (Canada)?
Hi Sunny:

I think both these funds are excellent international funds. A few one-hundred's of a percent expense ratio is meaningless compared with a fund's other qualities.

I slightly prefer Total International for the reasons given by Boglenaut and pwm.

There is more than one road to Dublin
Thanks Taylor. My "Taylor-made" 4-fund portfolio then stays as is.
"Cost matters". "Stay the course". "Press on, regardless". ― John C. Bogle

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Post by DoWahDaddy » Thu Aug 11, 2011 5:54 pm

I was pleased when Canada was added to the mix. This permitted a more cost effective way of gaining exposure to the country. but im unsure why there isnt a push to include the Middle East and Africa market. Granted this wouldnt be a large component, but the costs would be nominal in the grand scheme of things. I imagine there isnt much call for it in the individual market, but institutional? Has to make sense.

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Aptenodytes
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Post by Aptenodytes » Thu Aug 11, 2011 6:07 pm

Having more Admiral shares is actually bad for people like me who have the majority of their Vanguard holdings in an employer offering in which the Admiral funds are all strictly off limits, no matter the balance.

Not sure what logic dictates such decisions -- if Vanguard were strictly trying to gouge captive consumers I would understand it very easily but I don't have the sense that that's Vanguard's playbook.

In any event, when a fund becomes available in Admiral shares it seems that the costs have to go up for the other class of shares -- at the end of the day the books have to balance.

I'm at a medium-sized private university (28,000 students).

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mas
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Post by mas » Thu Aug 11, 2011 7:14 pm

Aptenodytes wrote:... in an employer offering in which the Admiral funds are all strictly off limits, no matter the balance.

Not sure what logic dictates such decisions -- if Vanguard were strictly trying to gouge captive consumers I would understand it very easily but I don't have the sense that that's Vanguard's playbook. ...
The problem with admiral shares is that every participant in an employer plan (a 401K at least) has to have the same choices -- you are not allowed to have a plan that favors those with higher balances.

Luckily Vanguard created "signal" class funds for plans like these. My Vanguard 401K has several funds with signal shares.

https://institutional.vanguard.com/VGAp ... sSSPricing

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joe8d
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Post by joe8d » Thu Aug 11, 2011 7:21 pm

I understand Vanguard will know it's costs and the distribution of accounts and all that.... but seems something like 50K would have made more sense from 100k then just 10k.....
My thoughts also.
All the Best, | Joe

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Post by leonard » Thu Aug 11, 2011 7:46 pm

Aptenodytes wrote:Having more Admiral shares is actually bad for people like me who have the majority of their Vanguard holdings in an employer offering in which the Admiral funds are all strictly off limits, no matter the balance.

Not sure what logic dictates such decisions -- if Vanguard were strictly trying to gouge captive consumers I would understand it very easily but I don't have the sense that that's Vanguard's playbook.

In any event, when a fund becomes available in Admiral shares it seems that the costs have to go up for the other class of shares -- at the end of the day the books have to balance.

I'm at a medium-sized private university (28,000 students).
But, plans can offer "signal" class shares, which usually have ER's comparable to Admiral. So, at their discretion, your plan admin's could provide Signal shares.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

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Boglenaut
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Post by Boglenaut » Thu Aug 11, 2011 8:38 pm

Maybe the next step is to add the following classes;

$100,000 - Chief of Naval Operations
$250,000 - Commander in Chief

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Post by sscritic » Thu Aug 11, 2011 8:58 pm

There are three groups of holders:
under 10k
between 10k and 50k
over 50k
call them low, middle, and upper admirals.

Funds used to charge low and middle the same amount and upper admirals less. Now many of these same funds are charging middle and upper the same and only low pays the high charge. It doesn't take much math to see that they have to either charge the low more or the upper more with such a switch.

Example: imagine the amount of money invested is as follows:
low 30%
middle 30%
upper 40%

Suppose the charges were 0.18%, 0.18% and 0.09% (the old way). The average ER on the total fund is (3x1.8 + 3x1.8 + 4x.9)/100 = 0.144%
To collect the same amount of money when middle and upper pay the same, you need to charge 0.20%,0.12%, and 0.12% (or something similar) since (3x2 + 3x1.2 + 4x1.2)/100 = 0.144%
Note that this requires low to pay more and upper to pay more, all to reduce the cost for the middle.

This fact will not change if the total cost goes down. Vanguard still has to decide if they want the benefits to go to the middle class (and charge the lower class and upper class more than otherwise) or if they want to keep the middle class costs higher (but still lower than before) in order to reduce the costs of the lower and upper classes. By lowering the entry level for Admiral, Vanguard has chosen to cater to the middle class at the expense of the others.

nyblitz
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Post by nyblitz » Thu Aug 11, 2011 10:12 pm

Re: admiral shares in 401k, Livesoft found an interesting excerpt a few months ago:

http://www.bogleheads.org/forum/viewtopic.php?t=75396

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Aptenodytes
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Post by Aptenodytes » Thu Aug 11, 2011 10:18 pm

nyblitz wrote:Re: admiral shares in 401k, Livesoft found an interesting excerpt a few months ago:

http://www.bogleheads.org/forum/viewtopic.php?t=75396
Thanks for the pointer. This helps me understand my predicament. This isn't a big deal all things considered.

Here's the NY Times piece Livesoft linked to earlier if you want it directly:
http://bucks.blogs.nytimes.com/2011/05/ ... 01k-plans/

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Admiral share classes

Post by shawcroft » Thu Aug 11, 2011 10:34 pm

If differing Admiral share classes were to be considered by Vanguard, here are my thoughts, derived from my days in the Navy.

Admiral: $10,000-$100,000. (Actually, this should be "Commodore" or "Commodore Admiral" which is a one-star Admiral- a Naval rank formerly used only in wartime.

Rear Admiral ( two-star) : $100,001-$250,000

Vice Admiral (three-star) : $250,001-$500,000

Admiral (four-star): $500,001 and above

These ranks equate to those in the Army, Air Force, and Marine Corps: Brigadier General (one-star); Major General (two-star); Lieutenant General (three star) and General ( four-star).

Shawcroft

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Post by gkaplan » Thu Aug 11, 2011 10:38 pm

Chairman of the Joint Chiefs-of-Staff?
Gordon

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Post by leod » Thu Aug 11, 2011 11:31 pm

visvx finally :)

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