Admiral share class for total world stock

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DartThrower
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Admiral share class for total world stock

Post by DartThrower » Sat Nov 10, 2018 10:34 am

Anyone have a guess as to when an admiral share class for this fund (VTWSX) might become available? Is it tied to reaching a certain threshold in total net assets? The current total net assets are almost $17b. I don't like paying more than 10 bp for any index fund.
Thanks.
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arcticpineapplecorp.
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Re: Admiral share class for total world stock

Post by arcticpineapplecorp. » Sat Nov 10, 2018 10:43 am

the fund costs 0.19%
https://investor.vanguard.com/mutual-fu ... file/VTWSX
the ETF costs 0.10%
https://investor.vanguard.com/etf/profile/vt
Buy the ETF instead of the Fund (VT)

As to when they will offer admiral shares, I don't know.
Last edited by arcticpineapplecorp. on Sat Nov 10, 2018 10:49 am, edited 1 time in total.
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stan1
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Re: Admiral share class for total world stock

Post by stan1 » Sat Nov 10, 2018 10:44 am

DartThrower wrote:
Sat Nov 10, 2018 10:34 am
Anyone have a guess as to when an admiral share class for this fund (VTWSX) might become available? Is it tied to reaching a certain threshold in total net assets? The current total net assets are almost $17b. I don't like paying more than 10 bp for any index fund.
Thanks.
Currently $15.1B of the $16.9B are in the ETF share class leaving $1.8B in the investor share class mutual fund. There's no way to predict what Vanguard will do but that's a relatively small amount and appears most investors are using the ETF.

In a tax deferred account I'd just use Total Stock Market and Total International Stock Market and rebalance once or twice per year. Right now the ratio is about 55% US to 45% Rest of World.

The other option is to use the ETF.

DSInvestor
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Re: Admiral share class for total world stock

Post by DSInvestor » Sat Nov 10, 2018 10:47 am

If you prefer to stick to mutual fund shares, consider a mix of Vanguard Total Stock Market Index Admiral VTSAX er=0.04% plus Vanguard Total International Stock Admiral VTIAX er=0.11%. The weighted average expense ratio of these two funds should be lower than the 0.10% expense ratio of the Total World ETF.
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arcticpineapplecorp.
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Re: Admiral share class for total world stock

Post by arcticpineapplecorp. » Sat Nov 10, 2018 10:53 am

DSInvestor wrote:
Sat Nov 10, 2018 10:47 am
If you prefer to stick to mutual fund shares, consider a mix of Vanguard Total Stock Market Index Admiral VTSAX er=0.04% plus Vanguard Total International Stock Admiral VTIAX er=0.11%. The weighted average expense ratio of these two funds should be lower than the 0.10% expense ratio of the Total World ETF.
I was going to suggest this as a second option to just buying the ETF for 0.10%.
If you do 50/50 U.S./International (total stock market for both) the admiral share classes total would be 0.075%.

total U.S. 0.04%
total international 0.11%

(.50 X .04) + (.50 X .11) = 0.075%

7 1/2 bps.
Last edited by arcticpineapplecorp. on Sat Nov 10, 2018 2:19 pm, edited 3 times in total.
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Earl Lemongrab
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Re: Admiral share class for total world stock

Post by Earl Lemongrab » Sat Nov 10, 2018 2:14 pm

stan1 wrote:
Sat Nov 10, 2018 10:44 am
In a tax deferred account I'd just use Total Stock Market and Total International Stock Market and rebalance once or twice per year. Right now the ratio is about 55% US to 45% Rest of World.
If you always buy at market weight, there would not be a reason to rebalance. The only reason for rebalancing is if you wanted a constant ratio between the two.
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Re: Admiral share class for total world stock

Post by jibantik » Sat Nov 10, 2018 2:21 pm

If we get admiral shares for total world it will be the happiest day I've had in the past 5 years. And I got married recently :shock:

your IPS
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Re: Admiral share class for total world stock

Post by your IPS » Sat Nov 10, 2018 2:31 pm

stan1 wrote:
Sat Nov 10, 2018 10:44 am
In a tax deferred account I'd just use Total Stock Market and Total International Stock Market and rebalance once or twice per year. Right now the ratio is about 55% US to 45% Rest of World.
I think there's value in keeping them separate even in a taxable account. You can tax loss harvest when one is down but not the other (e.g. international for much of this year).
Always follow your IPS.

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Re: Admiral share class for total world stock

Post by drk » Sat Nov 10, 2018 2:39 pm

This forum sometimes tends to miss the forest for the trees. We're talking about a difference of less than one-tenth of one percent. On $1 million in Investor shares, you pay $1900 annually. In the ETF, you pay $1000. Is $900 a year nothing? No, of course not, but it's a really small marginal difference. You can net the same amount of money every year by opening one premium credit card with a high sign-up bonus.

Granted, focusing on this difference is more reasonable than the people going bonkers over Fidelity's nominally free index funds.

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Re: Admiral share class for total world stock

Post by DartThrower » Sat Nov 10, 2018 5:26 pm

stan1 wrote:
Sat Nov 10, 2018 10:44 am

Currently $15.1B of the $16.9B are in the ETF share class leaving $1.8B in the investor share class mutual fund. There's no way to predict what Vanguard will do but that's a relatively small amount and appears most investors are using the ETF.

In a tax deferred account I'd just use Total Stock Market and Total International Stock Market and rebalance once or twice per year. Right now the ratio is about 55% US to 45% Rest of World.

The other option is to use the ETF.
It didn't occur to me that such a disproportionate amout was with the ETF.

Thanks for the replies. I guess I'm curious about the process by which Vanguard makes the decision to offer Admiral shares. Since I am near retirement age I have a significant amount to potentially devote to that fund, but as it stands now I just use admiral versions of TSM and TISM and roughly mirror the fund. You're right, I could bite the bullet and start investing in ETFs, but I'm more comfortable with mutual funds. The savings is meaningful in my case.

My dream is to some day have a two fund portfolio!
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JoMoney
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Re: Admiral share class for total world stock

Post by JoMoney » Sat Nov 10, 2018 5:44 pm

If it ever happens, my guess would be that the "Institutional class" version of the fund VTWIX would at some point be converted to admiral class. There was another fund, I can't remember off hand, that had the admiral class created that way.
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Re: Admiral share class for total world stock

Post by asset_chaos » Sat Nov 10, 2018 6:46 pm

Total world investor share cost 50 bp when the fund had 100 million in assets and cost 20 bp when it had 1 billion. From memory the fund's fiscal year ends in October. Sometime in December perhaps we'll be able to look at the annual report to see what the actual expenses of the fund were over the last 12 months. For several years the actual expenses have been lower than the headline prospectus expense ratio and have foreshadowed an announcement around February that the expense ratio was being lowered.

I wrote the following last year in a thread ( viewtopic.php?f=10&t=212013&hilit=cost+total+world) about total world's cost,
Vanguard data says as of end of January [2017], total world investor shares have $1.2 billion, institutional $1.8 billion and total assets of $9.6 b. Only speculation, but with investor shares now over a billion in assets, perhaps that's a breakpoint at which they'd look at adding admiral shares. Perhaps the difficulty is that most/all of the investor shares would convert to admiral class, if it existed, in which case they couldn't lower the er of most/all of the share class today by 10 bp ($1.2 million) and still run the share class at cost, since it costs 21 bp ($2.5 million) to run today. Again speculation, but we may have to wait until investor share assets get around $2.5 billion before we see admiral shares.
If it still costs around $2.5 million to run the investor share class of total world and most of the shareholders have more than the $10k for admiral shares, then we're probably going to have to wait for total world to put on another 0.7 billion or so to be able to seriously expect admiral shares for 10 bp: another year or two's worth of asset growth unless lower stock markets drag assets down. And, if the costs come down even without creating an admiral share class, I won't complain about not being promoted to admiral.
Regards, | | Guy

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Re: Admiral share class for total world stock

Post by alex_686 » Sat Nov 10, 2018 6:57 pm

DartThrower wrote:
Sat Nov 10, 2018 5:26 pm
I guess I'm curious about the process by which Vanguard makes the decision to offer Admiral shares.
I doubt that Vanguard will every offer Admiral shares again. The ETF structure is cheaper to run a mutual fund structure. ETFs are the future.

jibantik
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Re: Admiral share class for total world stock

Post by jibantik » Sat Nov 10, 2018 8:47 pm

drk wrote:
Sat Nov 10, 2018 2:39 pm
This forum sometimes tends to miss the forest for the trees. We're talking about a difference of less than one-tenth of one percent. On $1 million in Investor shares, you pay $1900 annually. In the ETF, you pay $1000. Is $900 a year nothing? No, of course not, but it's a really small marginal difference. You can net the same amount of money every year by opening one premium credit card with a high sign-up bonus.

Granted, focusing on this difference is more reasonable than the people going bonkers over Fidelity's nominally free index funds.
I get your point, but you also lose out on the compounded returns of the $1900.

$1900 every year compounded over an investment lifetime is actually quite a bit. Assuming Smartvestor pro returns of 12%, over 40 years, $1900 dollars invested annualy is equivalent to 1.6 million dollars.

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Re: Admiral share class for total world stock

Post by software » Sat Nov 10, 2018 9:34 pm

jibantik wrote:
Sat Nov 10, 2018 2:21 pm
If we get admiral shares for total world it will be the happiest day I've had in the past 5 years. And I got married recently :shock:
That’s pretty sad actually...

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Re: Admiral share class for total world stock

Post by stan1 » Sat Nov 10, 2018 9:47 pm

jibantik wrote:
Sat Nov 10, 2018 8:47 pm

$1900 every year compounded over an investment lifetime is actually quite a bit. Assuming Smartvestor pro returns of 12%, over 40 years, $1900 dollars invested annualy is equivalent to 1.6 million dollars.
12% per year over 40 years? Good luck with that!

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Re: Admiral share class for total world stock

Post by Dead Man Walking » Sat Nov 10, 2018 9:53 pm

alex_686 wrote:
Sat Nov 10, 2018 6:57 pm
DartThrower wrote:
Sat Nov 10, 2018 5:26 pm
I guess I'm curious about the process by which Vanguard makes the decision to offer Admiral shares.
I doubt that Vanguard will every offer Admiral shares again. The ETF structure is cheaper to run a mutual fund structure. ETFs are the future.
+1 Furthermore, the popularity of ETFs may be a significant reason why they are pushing the brokerage platform.

DMW

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Re: Admiral share class for total world stock

Post by lostdog » Sat Nov 10, 2018 10:10 pm

Dead Man Walking wrote:
Sat Nov 10, 2018 9:53 pm
alex_686 wrote:
Sat Nov 10, 2018 6:57 pm
DartThrower wrote:
Sat Nov 10, 2018 5:26 pm
I guess I'm curious about the process by which Vanguard makes the decision to offer Admiral shares.
I doubt that Vanguard will every offer Admiral shares again. The ETF structure is cheaper to run a mutual fund structure. ETFs are the future.
+1 Furthermore, the popularity of ETFs may be a significant reason why they are pushing the brokerage platform.

DMW
It would be nice to know for sure if this is the case.

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Re: Admiral share class for total world stock

Post by drk » Sat Nov 10, 2018 10:22 pm

jibantik wrote:
Sat Nov 10, 2018 8:47 pm
drk wrote:
Sat Nov 10, 2018 2:39 pm
This forum sometimes tends to miss the forest for the trees. We're talking about a difference of less than one-tenth of one percent. On $1 million in Investor shares, you pay $1900 annually. In the ETF, you pay $1000. Is $900 a year nothing? No, of course not, but it's a really small marginal difference. You can net the same amount of money every year by opening one premium credit card with a high sign-up bonus.

Granted, focusing on this difference is more reasonable than the people going bonkers over Fidelity's nominally free index funds.
I get your point, but you also lose out on the compounded returns of the $1900.

$1900 every year compounded over an investment lifetime is actually quite a bit. Assuming Smartvestor pro returns of 12%, over 40 years, $1900 dollars invested annualy is equivalent to 1.6 million dollars.
Wait, that's $900, not $1900.

I also question the assumption that someone sitting at $1 million in VT/VTWSX today has 40 years of compounding in their future, but that's beside the point.

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Re: Admiral share class for total world stock

Post by asset_chaos » Sat Nov 10, 2018 11:47 pm

alex_686 wrote:
Sat Nov 10, 2018 6:57 pm
I doubt that Vanguard will every offer Admiral shares again. The ETF structure is cheaper to run a mutual fund structure. ETFs are the future.
Evidence is mixed. On the one hand, Vanguard launched the multifactor fund this year with admiral and etf share classes. On the other hand, Vanguard launched the total world bond fund this year with only the etf share class. Outside the US, Vanguard still seems to prefer to have three share classes of funds, retail, wholesale, and etf. At least in Australia the wholesale shares have minimum investment amounts much larger than US admiral shares but much lower than US institutional shares; they're close to the $100k admiral share minimums were when admiral shares were first introduced.
Regards, | | Guy

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Re: Admiral share class for total world stock

Post by alex_686 » Sun Nov 11, 2018 7:58 am

asset_chaos wrote:
Sat Nov 10, 2018 11:47 pm
alex_686 wrote:
Sat Nov 10, 2018 6:57 pm
I doubt that Vanguard will every offer Admiral shares again. The ETF structure is cheaper to run a mutual fund structure. ETFs are the future.
Evidence is mixed. On the one hand, Vanguard launched the multifactor fund this year with admiral and etf share classes. On the other hand, Vanguard launched the total world bond fund this year with only the etf share class. Outside the US, Vanguard still seems to prefer to have three share classes of funds, retail, wholesale, and etf. At least in Australia the wholesale shares have minimum investment amounts much larger than US admiral shares but much lower than US institutional shares; they're close to the $100k admiral share minimums were when admiral shares were first introduced.
I read the other week that ETFs were not popular in Australia. That brokers can get a commission when selling mutual funds but not ETFs. Mutual funds still have a slight edge over ETFs in mutual funds in the US.

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Re: Admiral share class for total world stock

Post by asset_chaos » Mon Nov 12, 2018 7:23 pm

alex_686 wrote:
Sun Nov 11, 2018 7:58 am
asset_chaos wrote:
Sat Nov 10, 2018 11:47 pm
alex_686 wrote:
Sat Nov 10, 2018 6:57 pm
I doubt that Vanguard will every offer Admiral shares again. The ETF structure is cheaper to run a mutual fund structure. ETFs are the future.
Evidence is mixed. On the one hand, Vanguard launched the multifactor fund this year with admiral and etf share classes. On the other hand, Vanguard launched the total world bond fund this year with only the etf share class. Outside the US, Vanguard still seems to prefer to have three share classes of funds, retail, wholesale, and etf. At least in Australia the wholesale shares have minimum investment amounts much larger than US admiral shares but much lower than US institutional shares; they're close to the $100k admiral share minimums were when admiral shares were first introduced.
I read the other week that ETFs were not popular in Australia. That brokers can get a commission when selling mutual funds but not ETFs. Mutual funds still have a slight edge over ETFs in mutual funds in the US.
I'm not sure about relative popularity. But it is the case that that cost difference of Vanguard AU ETFs and retail share funds is much larger than in the US. E.g., it's 14 vs 75 bp for the Australian ASX300 stock index fund. And I see there is only 0.5 billion in the retail fund, while there is 3 billion in the etf. On the other hand, the wholesale fund has 10 billion and costs 18 bp. The wholesale fund has gotten onto the investment menu of several well-run superannuation/retirement funds.
Regards, | | Guy

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Re: Admiral share class for total world stock

Post by DartThrower » Fri Nov 16, 2018 8:27 am

It's interesting that the brand new Vanguard Global Credit Bond Fund has an Admiral Share class already (VGCAX).
A Boglehead can stay the course longer than the market can stay irrational.

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Re: Admiral share class for total world stock

Post by stan1 » Fri Nov 16, 2018 8:40 am

DartThrower wrote:
Fri Nov 16, 2018 8:27 am
It's interesting that the brand new Vanguard Global Credit Bond Fund has an Admiral Share class already (VGCAX).
It's actively managed so the minimum is $50K. Perhaps it is part of a strategy to attract assets to this new fund and Vanguard feels they don't need to do that with Total World?

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Re: Admiral share class for total world stock

Post by stan1 » Fri Nov 16, 2018 8:44 am

As for admiral shares in general remember Vanguard still hasn't offered them for Target Retirement or LifeStrategy fund of funds. There might be some complexity in promoting a fund of funds investment in a taxable account to Admiral shares but they could certainly offer them for new investments and in retirement accounts if they chose to do so. A lot of the assets under management that are still in investor shares could be tied up in funds of funds. I didn't take the time to add up the value of all the different funds of funds but it looks like its $150-200B split out into TSM, TISM, TBM, and TBM II investor shares. I don't think we've ever heard from Vanguard why they haven't offered Admiral shares for these funds.

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