Bloomberg article on American and a bit of Vanguard

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BeachPerson
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Location: Northern VA

Bloomberg article on American and a bit of Vanguard

Post by BeachPerson » Tue May 14, 2019 5:22 pm

American Funds
Nice article on American Funds and their strategy
That argument has gotten through to some people. Last year, Capital Group attracted $7.8 billion in net new client money. But Vanguard raked in $230 billion, fueled by fees as low as 4¢ per $100 under management—about one-tenth the cost of Capital Group’s cheapest funds. Fidelity Investments, with $2.4 trillion in assets, took the trend to the extreme in August by offering the industry’s first zero-fee indexed mutual funds.
David | | From Jack Brennan's "Straight Talk on Investing", page 23 "Living below your means is the ultimate financial strategy"

GCD
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Joined: Tue Sep 26, 2017 7:11 pm

Re: Bloomberg article on American and a bit of Vanguard

Post by GCD » Tue May 14, 2019 5:30 pm

BeachPerson wrote:
Tue May 14, 2019 5:22 pm
...took the trend to the extreme in August by offering the industry’s first zero-fee indexed mutual funds.
We should start a pool to guess the date someone offers to pay you to have funds under management. Zero fee is already a money loser for them since it costs something to run an index fund. Why not lose a little more money? It's obviously a loss leader, not profitable in itself.

HawkeyePierce
Posts: 144
Joined: Tue Mar 05, 2019 10:29 pm
Location: Colorado

Re: Bloomberg article on American and a bit of Vanguard

Post by HawkeyePierce » Tue May 14, 2019 5:41 pm

GCD wrote:
Tue May 14, 2019 5:30 pm
BeachPerson wrote:
Tue May 14, 2019 5:22 pm
...took the trend to the extreme in August by offering the industry’s first zero-fee indexed mutual funds.
We should start a pool to guess the date someone offers to pay you to have funds under management. Zero fee is already a money loser for them since it costs something to run an index fund. Why not lose a little more money? It's obviously a loss leader, not profitable in itself.
It already happened.

https://www.cnbc.com/2019/03/12/new-etf ... nvest.html

quasiindex
Posts: 14
Joined: Thu Mar 16, 2017 11:22 am

Re: Bloomberg article on American and a bit of Vanguard

Post by quasiindex » Tue May 14, 2019 5:42 pm

Index funds actually make money by lending their securities to short-sellers so they can actually afford to have no fee and still make money.

https://www.barrons.com/articles/etfs-h ... 1523054918

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