Vanguard cuts minimum investments on 27 funds

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stevewolfe
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Vanguard cuts minimum investments on 27 funds

Post by stevewolfe »

Here are the details from Morningstar: http://news.morningstar.com/articlenet/ ... ?id=380967. I don't *think* this has already been posted...

Target retirement funds down to $1,000 minimum, Wellington down to $3,000 - a number of closed funds had their minimum dropped as well.
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hollowcave2
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big news

Post by hollowcave2 »

Wow, this is big news. Thanks for the post!

I've always wanted to get into International Explorer fund. I'll check it out.
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hollowcave2
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lots of threads

Post by hollowcave2 »

Lots of threads on this, but Vanguard website has not updated to this news. I'll look at it again tomorrow.

For now, M* has broke the news. Nothing on Vanguard site yet as of 5/10/11.
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Post by GammaPoint »

That's really great news for new investors who are looking at getting into indexing.
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rob
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Post by rob »

This will help me move some funds around..... I have been unable to expand int exp because it's been locked into an IRA that I cannot contribute to and the 25K min stopped me adding it elsewhere.
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ruralavalon
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Post by ruralavalon »

This is great news for newer or younger savers, with modest incomes, who want to start investing in low expense Vanguard funds.
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Post by jmbkb4 »

great post - thanks
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jh
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...

Post by jh »

...
Last edited by jh on Sat May 14, 2011 9:58 pm, edited 1 time in total.
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Post by leeks »

A nice change!
Keim
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Re: Vanguard cuts minimum investments on 27 funds

Post by Keim »

I've been thinking about buying the energy fund. The decision just got a lot easier.
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Post by Jacobkg »

Looks like the market neutral fund minimum is still $250,000. Fiddlesticks!
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nisiprius
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Post by nisiprius »

Keim wrote:I've been thinking about buying the energy fund. The decision just got a lot easier.
Forgive me, but that illustrates perfectly why I am not totally enthusiastic about this move. If I read in a few months about how new money has been pouring into Vanguard Precious Metals & Mining, I will know that Vanguard has been a little bit evil.
Jacobkg wrote:Looks like the market neutral fund minimum is still $250,000. Fiddlesticks!
With $134.1 million total in that fund, there can't possibly be more than 538 people who have invested in it. Just about right to form a Vanguard Market Neutral Investor's club; they would fit nicely in a business conference center auditorium.
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Post by lazyday »

Nice to see this.

Also glad the $1000 is limited to TR and Star, and not overly widespread, to increase costs for everyone in long run.

If I were starting with under $3000, I think I'd be pretty happy with that selection til hit 3k.
Other than optimizing taxes, but close enough.
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hollowcave2
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everything updated

Post by hollowcave2 »

Everything updated on Vanguard now. Looks great.

Especially good news for new investors and small investors. But investors who already have a well established portfolio be careful of splitting into too many funds. I'm one of those! I like to have everything, so I'll resist the temptation to buy more unless I need it.
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Exige
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Post by Exige »

Im really glad this happened even though I was close to the 3k mark it will help get my fiance and brother in easier!
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Post by KyleAAA »

Just yesterday I was wishing the precious metals and mining fund had a lower minimum!
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kenyan
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Post by kenyan »

nisiprius wrote:
Keim wrote:I've been thinking about buying the energy fund. The decision just got a lot easier.
Forgive me, but that illustrates perfectly why I am not totally enthusiastic about this move. If I read in a few months about how new money has been pouring into Vanguard Precious Metals & Mining, I will know that Vanguard has been a little bit evil.
Jacobkg wrote:Looks like the market neutral fund minimum is still $250,000. Fiddlesticks!
With $134.1 million total in that fund, there can't possibly be more than 538 people who have invested in it. Just about right to form a Vanguard Market Neutral Investor's club; they would fit nicely in a business conference center auditorium.
Hmm...and the Market Neutral Fund is described by Vanguard as:

"The fund may be appropriate for a small portion of an already well-diversified portfolio."

Small portion, so 5% or so? So, I'd need at least 5 million to invest properly in that fund. Well that sure peeves me.
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Post by chipmonk »

nisiprius wrote:
Keim wrote:I've been thinking about buying the energy fund. The decision just got a lot easier.
Forgive me, but that illustrates perfectly why I am not totally enthusiastic about this move. If I read in a few months about how new money has been pouring into Vanguard Precious Metals & Mining, I will know that Vanguard has been a little bit evil.
When you say "evil", are you suggesting that Vanguard is being opportunistic in expanding its offerings of risky investments to small investors who probably shouldn't be buying them. My impression was that they're lowering minimums to $3,000 simply because they've decided that they're able to do so without affecting costs for larger investors, and that they weren't picking and choosing specific funds. Naive?
nisiprius wrote:
Jacobkg wrote:Looks like the market neutral fund minimum is still $250,000. Fiddlesticks!
With $134.1 million total in that fund, there can't possibly be more than 538 people who have invested in it. Just about right to form a Vanguard Market Neutral Investor's club; they would fit nicely in a business conference center auditorium.
I don't understand the market neutral fund at all. ER of 1.8%, huge minimum investment, crummy returns, and a strategy that mortals apparently can't understand. Is this Vanguard's experiment at creating something like a relatively low-cost hedge fund?
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Post by beardsworth »

nisiprius wrote:
Keim wrote:I've been thinking about buying the energy fund. The decision just got a lot easier.
Forgive me, but that illustrates perfectly why I am not totally enthusiastic about this move. If I read in a few months about how new money has been pouring into Vanguard Precious Metals & Mining, I will know that Vanguard has been a little bit evil.
Always respect your opinions, nisiprius, but am not sure I "get" this one.

If it's a concern (since you specifically mention Precious Metals) that a lot of people may make ill–considered moves into specialized/volatile sector funds, then I understand.

But if it's a more generalized concern about the reduced entry requirements for the whole list of funds (other than the balanced Target Retirement offerings) in the article referenced by the OP, then I don't.

Vanguard has on occasion closed certain funds, but when fund assets become unwieldy and/or lots of new money is flowing, it's my impression that Vanguard has more often tended to respond by raising the investment minimum ($10,000 for Wellington, $25,000 for others, etc.) to deter new customers.

This has the effect of shutting out the "little people" while leaving the funds open to the already well–heeled. I would much prefer that the entry requirements for all Vanguard funds be made affordable––and then, if a fund grew too large to manage, Vanguard could "democratically" close it to all new investors, regardless of their financial means.

Marc
Last edited by beardsworth on Wed May 11, 2011 2:52 pm, edited 1 time in total.
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touchdowntodd
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Post by touchdowntodd »

VERY cool.. i was just commenting on their post about this on FB ...

good move for the company considering the competition still has even lower buy ins.. however some great choices! i used STAR to get up to $3k and moved to the areas i was truly after..

nice drops in some of those more specialized funds too! makes me think.. hmmm
tryin to do this right... thanks guys
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Post by partisan »

MarcMyWord wrote:
nisiprius wrote:
Keim wrote:I've been thinking about buying the energy fund. The decision just got a lot easier.
Forgive me, but that illustrates perfectly why I am not totally enthusiastic about this move. If I read in a few months about how new money has been pouring into Vanguard Precious Metals & Mining, I will know that Vanguard has been a little bit evil.
Always respect your opinions, nisiprius, but am not sure I "get" this one.

If it's a concern (since you specifically mention Precious Metals) that a lot of people may make ill–considered moves into specialized/volatile sector funds, then I understand.

Marc
I'm not sure I get this either, are you saying Vanguard should decide which sectors it would be foolish for investors to invest into because they're hot and block them by raising the minimum? So by this logic in the 90s they would have upped minimums to growth and tech funds, in the 2000s upped the minimums to REITS, am I understanding correctly?

If this is true it would be great if Vanguard had that sort of foresight, but it seems to go against the grain of this sight to suggest so. Maybe I'm missing something.

I'm just happy it's easier to buy Wellington and International Explorer. So this news satisfies me.
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Post by partisan »

MarcMyWord wrote:
nisiprius wrote:
Keim wrote:I've been thinking about buying the energy fund. The decision just got a lot easier.
Forgive me, but that illustrates perfectly why I am not totally enthusiastic about this move. If I read in a few months about how new money has been pouring into Vanguard Precious Metals & Mining, I will know that Vanguard has been a little bit evil.
Always respect your opinions, nisiprius, but am not sure I "get" this one.

If it's a concern (since you specifically mention Precious Metals) that a lot of people may make ill–considered moves into specialized/volatile sector funds, then I understand.

Marc
I'm not sure I get this either, are you saying Vanguard should decide which sectors it would be foolish for investors to invest into because they're hot and block them by raising the minimum? So by this logic in the 90s they would have upped minimums to growth and tech funds, in the 2000s upped the minimums to REITS, am I understanding correctly?

If this is true it would be great if Vanguard had that sort of foresight, but it seems to go against the grain of this sight to suggest so. Maybe I'm missing something.

I'm just happy it's easier to buy Wellington and International Explorer. So this news satisfies me.
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Post by partisan »

MarcMyWord wrote:
nisiprius wrote:
Keim wrote:I've been thinking about buying the energy fund. The decision just got a lot easier.
Forgive me, but that illustrates perfectly why I am not totally enthusiastic about this move. If I read in a few months about how new money has been pouring into Vanguard Precious Metals & Mining, I will know that Vanguard has been a little bit evil.
Always respect your opinions, nisiprius, but am not sure I "get" this one.

If it's a concern (since you specifically mention Precious Metals) that a lot of people may make ill–considered moves into specialized/volatile sector funds, then I understand.

Marc
I'm not sure I get this either, are you saying Vanguard should decide which sectors it would be foolish for investors to invest into because they're hot and block them by raising the minimum? So by this logic in the 90s they would have upped minimums to growth and tech funds, in the 2000s upped the minimums to REITS, am I understanding correctly?

If this is true it would be great if Vanguard had that sort of foresight, but it seems to go against the grain of this sight to suggest so. Maybe I'm missing something.

I'm just happy it's easier to buy Wellington and International Explorer. So this news satisfies me.
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Post by hsv_climber »

Maybe except for some Target Retirement fund (and even that one is a very questionable thing due to their tax inefficiency), why would any member of this forum would want to invest into any of these funds?
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Post by nisiprius »

MarcMyWord wrote:If it's a concern (since you specifically mention Precious Metals) that a lot of people may make ill–considered moves into specialized/volatile sector funds, then I understand.
Yes, that's what I mean. But more generally--just repeating what I've heard said--sudden flows of "hot money" into actively managed mutual funds are often said to be bad for the fund's performance, because there are only so many good opportunities out there and a fund manager can't necessarily find more just because a lot of people suddenly would like to get in on them.
partisan wrote:are you saying Vanguard should decide which sectors it would be foolish for investors to invest into because they're hot and block them by raising the minimum?
This is exactly what they've done in the past. For example, Google finds me this year-2000 press release:
The Board of Trustees of Vanguard Health Care Fund has raised the Fund's minimum initial investment amount from $10,000 to $25,000 for all new accounts in an effort to moderate cash inflows and control asset growth.... "The Fund's Board concluded that taking this proactive measure will protect the interests of existing shareholders by curtailing cash inflows and limiting the future size of the Fund."
Why, then, are they now cutting the minimum from $25,000 to $3,000, a bigger change? Presumably, it will boost cash inflows and spur asset growth... and, possibly, not protect the interests of existing shareholders?

In the case of Precious Metals, they only re-opened that fund in 2008, now they're cutting the minimum investment to $3,000.

One would like to have a clearer rationale for this than "Vanguard is standardizing the minimum investment requirement for Investor Shares of nearly all Vanguard funds at $3,000." They could have done this at any time. Why weren't they "standardized" in the first place (answer: "to moderate cash inflows, control asset growth, protect the interests of existing shareholders"), and why is this the right time to "standardize" them?
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Post by Eureka »

We will know in the fullness of time if Nisiprius' fears are well-founded. My initial reaction was positive. On the surface, at least, this makes the only "mutual" mutual-fund company more of an "Everyman's" company.

I would LOVE to know what Bogle thinks. Somebody ask him!
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Post by dumbmoney »

Eureka wrote:I would LOVE to know what Bogle thinks. Somebody ask him!
http://www.usnews.com/usnews/biztech/ar ... uard_2.htm
But Brennan recently launched several new sector funds to augment those started by Bogle in the 1980s--much to Bogle's dismay. "Sector funds are losers for investors," says Bogle, who is careful not to criticize current management. "I made the awful mistake of starting a bunch of sector funds in 1985, and I am man enough to admit my mistake."
I am pleased to report that the invisible forces of destruction have been unmasked, marking a turning point chapter when the fraudulent and speculative winds are cast into the inferno of extinction.
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Post by Eureka »

dumbmoney wrote:
Eureka wrote:I would LOVE to know what Bogle thinks. Somebody ask him!
http://www.usnews.com/usnews/biztech/ar ... uard_2.htm
But Brennan recently launched several new sector funds to augment those started by Bogle in the 1980s--much to Bogle's dismay. "Sector funds are losers for investors," says Bogle, who is careful not to criticize current management. "I made the awful mistake of starting a bunch of sector funds in 1985, and I am man enough to admit my mistake."
VGENX is the only one I own. It's a tiny part of my portfolio and a long-term investment. I bought it mostly because my uncle kept asking me why Bob Brinker never recommends sector funds, especially this one. I tell my uncle that I bought it for this reason: If it does well, I make money; if it does poorly, I'll blame my uncle. It's all good!

I agree that making big bets on sectors will probably kill most investors.
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Post by norookie »

:D To me it sounds like possibly a lot of cash is going into the Mkt. VG needs to stay competitive! Just sayin~
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