Admiral Shares vs Investor Shares?

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rylemdr
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Admiral Shares vs Investor Shares?

Post by rylemdr » Sat Jun 25, 2011 10:00 am

I'm looking at the types of funds available in the Vanguard website. What are Admiral Shares and Investor Shares? What other differences are there other than a lower expense ratio/higher min-investment, and higher expense ratio/lower min-investment respectively?

I would assume Admiral Shares would encourage "wholesale" purchases while Investor Shares are more "retail". Is this a good analogy?

dbr
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Re: Admiral Shares vs Investor Shares?

Post by dbr » Sat Jun 25, 2011 10:06 am

rylemdr wrote:I'm looking at the types of funds available in the Vanguard website. What are Admiral Shares and Investor Shares? What other differences are there other than a lower expense ratio/higher min-investment, and higher expense ratio/lower min-investment respectively?

I would assume Admiral Shares would encourage "wholesale" purchases while Investor Shares are more "retail". Is this a good analogy?
I would say it is more like a good customer discount. Wholesale would be institutional shares where the threshold is in the few hundred million $ range sold to retirement plans and the like. With reduction in the Admiral minimum there is some discussion why the distinction even exists.

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Re: Admiral Shares vs Investor Shares?

Post by rylemdr » Sat Jun 25, 2011 10:13 am

dbr wrote:
rylemdr wrote:I'm looking at the types of funds available in the Vanguard website. What are Admiral Shares and Investor Shares? What other differences are there other than a lower expense ratio/higher min-investment, and higher expense ratio/lower min-investment respectively?

I would assume Admiral Shares would encourage "wholesale" purchases while Investor Shares are more "retail". Is this a good analogy?
I would say it is more like a good customer discount. Wholesale would be institutional shares where the threshold is in the few hundred million $ range sold to retirement plans and the like. With reduction in the Admiral minimum there is some discussion why the distinction even exists.
I was wondering the same thing. If Vanguard wants to keep expense ratios low, why is this the case!!

Have investors grouped together to make, for example, the Admiral Shares of a 500 index fund? If I only have 3k to invest for instance, and you have 3k, and another guy has 4k and we want to get the discount, we could put all our money together and invest for a lower expense ratio. Like a mutual fund for Vanguard mutual funds! :D

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Post by 555 » Sat Jun 25, 2011 10:24 am

Just pack your lunch one day.

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Re: Admiral Shares vs Investor Shares?

Post by Khanmots » Sat Jun 25, 2011 10:48 am

rylemdr wrote:
dbr wrote:
rylemdr wrote:I'm looking at the types of funds available in the Vanguard website. What are Admiral Shares and Investor Shares? What other differences are there other than a lower expense ratio/higher min-investment, and higher expense ratio/lower min-investment respectively?

I would assume Admiral Shares would encourage "wholesale" purchases while Investor Shares are more "retail". Is this a good analogy?
I would say it is more like a good customer discount. Wholesale would be institutional shares where the threshold is in the few hundred million $ range sold to retirement plans and the like. With reduction in the Admiral minimum there is some discussion why the distinction even exists.
I was wondering the same thing. If Vanguard wants to keep expense ratios low, why is this the case!!

Have investors grouped together to make, for example, the Admiral Shares of a 500 index fund? If I only have 3k to invest for instance, and you have 3k, and another guy has 4k and we want to get the discount, we could put all our money together and invest for a lower expense ratio. Like a mutual fund for Vanguard mutual funds! :D
And how much will it cost to design the system that does that?

The way I look at investor vs. admiral is that admiral shares are the "normal" shares, and that "normally" you're not allowed in for less than $10k in an investment (or $25k depending). But... if you really want a small amount, then they'll tack on a small extra fee to help you pay your way. There *are* overhead costs with you having that account more-so than a trivially minuscule amount of computer resources. So it makes sense to me, and I've no issues with paying the slightly higher fees at this point.

Personally I see it as paying for education, I'm able to learn early if slice and dice is really for me when I don't have much yet invested so the consequences are lower if I change my mind and go to a simple strategy (taxes and the like). I'm pretty sure it is though... because all this crunching numbers and stuff is FUN! (And yes I do understand that the vast vast majority of my time spent on slice and dice allocations is spent way way out on the tail end of the returns to time curve. But that's ok, I see it as getting minimally paid for being entertained :P)

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Re: Admiral Shares vs Investor Shares?

Post by dbr » Sat Jun 25, 2011 11:22 am

Khanmots wrote: The way I look at investor vs. admiral is that admiral shares are the "normal" shares, and that "normally" you're not allowed in for less than $10k in an investment (or $25k depending). But... if you really want a small amount, then they'll tack on a small extra fee to help you pay your way. There *are* overhead costs with you having that account more-so than a trivially minuscule amount of computer resources. So it makes sense to me, and I've no issues with paying the slightly higher fees at this point.
I suspect this is a pretty good explanation and I agree the small difference in fees isn't a big deal.

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Post by IlikeJackB » Sat Jun 25, 2011 11:59 am

I believe most, if not all, index funds have a 10K minimum for Admiral shares, whereas actively managed funds require 50K for Admiral shares. If you're contemplating an investment between 10K and 50K in a single fund, this is an added impetus toward indexing.

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Re: Admiral Shares vs Investor Shares?

Post by nisiprius » Sat Jun 25, 2011 12:24 pm

rylemdr wrote:I'm looking at the types of funds available in the Vanguard website. What are Admiral Shares and Investor Shares? What other differences are there other than a lower expense ratio/higher min-investment, and higher expense ratio/lower min-investment respectively?
There are none. They are different share classes of the same fund with different expense ratios charged. It's kind of cute because of you use Morningstar to plot growth charts for the two, you can actually see the tiny but visible effect of the difference in expense ratios.

When first introduced, the minimum purchase for Admiral shares was, I think, $50,000, later raised to $100,000, and the stated rationale was that it cost less per share to service customers with bigger holdings, so they were passing those savings with back.

If you are holding your funds directly at Vanguard, if your balance on an Investor shares fund exceeds $10,000 Vanguard will eventually automatically convert it to Admiral shares, or you can click on a link and do it yourself.
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Re: Admiral Shares vs Investor Shares?

Post by curly lambeau » Sat Jun 25, 2011 12:53 pm

rylemdr wrote:
I was wondering the same thing. If Vanguard wants to keep expense ratios low, why is this the case!!
If they wanted to keep expense ratios lower, they could have a 10K minimum to get in at all.

$3K accounts are a drag on the fund and that's why they pay a slightly higher expense ratio. If everyone paid the same ratio, the smaller accounts would be subsidized by the larger.

Of course the cutoff is arbitrary, but it has to be somewhere. Imagine tens of thousands of accounts with a few hundred bucks.

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Re: Admiral Shares vs Investor Shares?

Post by rylemdr » Sat Jun 25, 2011 5:31 pm

nisiprius wrote:If you are holding your funds directly at Vanguard, if your balance on an Investor shares fund exceeds $10,000 Vanguard will eventually automatically convert it to Admiral shares, or you can click on a link and do it yourself.
Is this for real? Can anyone confirm this? No offense to you mr. Nisiprius, just making sure :)

So if I had 3k to invest, I should put it in early(instead of waiting for my money to reach 10k) because when I eventually reach 10k, the expense ratio will be lowered anyway. Correct?
khanmots wrote:And how much will it cost to design the system that does that?
Ahh, alas, more expense ratios!!

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Admiral Share History

Post by EyeDee » Sat Jun 25, 2011 5:53 pm

.
Originally:

"All shares purchased before the issuance of Admiral Shares are considered Investor Shares. You may convert Investor Shares into Admiral Shares at any time if your account balance in the Fund is at least $250,000. . . .

Three-year privilege. After three years in the Fund, you may convert Investor Shares into Admiral Shares if your account balance in the Fund is at least $150,000 and you are registered with Vanguard.com.

Ten-year privilege. After ten years in the Fund, you may convert Investor Shares into Admiral Shares if your account balance in the Fund is at least $50,000 and you are registered with Vanguard.com."

Later:

"Shares purchased before the issuance of Admiral Shares are considered Investor Shares.

Self-directed conversions. You may convert Investor Shares into Admiral Shares at any time if your account balance in the Fund is at least $100,000. Registered users of Vanguard.com may request a conversion to Admiral Shares online, or you may contact Vanguard by telephone or by mail to request this transaction. See Contacting Vanguard.

Tenure conversions. You are eligible for a self-directed conversion from Investor Shares into Admiral Shares if you have had an account in the Fund for ten years, that account balance is at least $50,000, and you are registered with Vanguard.com."

Now:

https://personal.vanguard.com/us/insigh ... t-10062010

"Effective today, Vanguard has reduced the minimum amount required to qualify for Admiral™ Shares to $10,000 for most of our broad-market index funds and $50,000 for actively managed funds, down from the previous $100,000 minimum. Admiral Shares cost significantly less than traditional fund shares, and their expense ratios are among the lowest in the mutual fund marketplace.
. . .
The minimum amount to qualify for Admiral Shares will remain at $100,000 for the following sector index funds: Consumer Discretionary Index Fund, Consumer Staples Index Fund, Energy Index Fund, Financials Index Fund, Health Care Index Fund, Industrials Index Fund, Information Technology Index Fund, Materials Index Fund, Telecommunication Services Index Fund, and Utilities Index Fund, and for the following tax-managed funds: Tax-Managed Capital Appreciation Fund, and Tax-Managed Growth and Income Fund."
Randy

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Re: Admiral Share History

Post by rylemdr » Sat Jun 25, 2011 5:55 pm

EyeDee wrote:.
Originally:

"All shares purchased before the issuance of Admiral Shares are considered Investor Shares. You may convert Investor Shares into Admiral Shares at any time if your account balance in the Fund is at least $250,000. . . .

Three-year privilege. After three years in the Fund, you may convert Investor Shares into Admiral Shares if your account balance in the Fund is at least $150,000 and you are registered with Vanguard.com.

Ten-year privilege. After ten years in the Fund, you may convert Investor Shares into Admiral Shares if your account balance in the Fund is at least $50,000 and you are registered with Vanguard.com."

Later:

"Shares purchased before the issuance of Admiral Shares are considered Investor Shares.

Self-directed conversions. You may convert Investor Shares into Admiral Shares at any time if your account balance in the Fund is at least $100,000. Registered users of Vanguard.com may request a conversion to Admiral Shares online, or you may contact Vanguard by telephone or by mail to request this transaction. See Contacting Vanguard.

Tenure conversions. You are eligible for a self-directed conversion from Investor Shares into Admiral Shares if you have had an account in the Fund for ten years, that account balance is at least $50,000, and you are registered with Vanguard.com."

Now:

https://personal.vanguard.com/us/insigh ... t-10062010

"Effective today, Vanguard has reduced the minimum amount required to qualify for Admiral™ Shares to $10,000 for most of our broad-market index funds and $50,000 for actively managed funds, down from the previous $100,000 minimum. Admiral Shares cost significantly less than traditional fund shares, and their expense ratios are among the lowest in the mutual fund marketplace.
. . .
The minimum amount to qualify for Admiral Shares will remain at $100,000 for the following sector index funds: Consumer Discretionary Index Fund, Consumer Staples Index Fund, Energy Index Fund, Financials Index Fund, Health Care Index Fund, Industrials Index Fund, Information Technology Index Fund, Materials Index Fund, Telecommunication Services Index Fund, and Utilities Index Fund, and for the following tax-managed funds: Tax-Managed Capital Appreciation Fund, and Tax-Managed Growth and Income Fund."
Awesome info! Thanks for this :)

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Another Update

Post by EyeDee » Sat Jun 25, 2011 6:05 pm

.
Vanguard recently changed the Tax-Managed funds Admiral requirements from the announcement I posted above:

https://personal.vanguard.com/us/insigh ... t-04282011

"Effective May 13, 2011, Admiral Shares will be available for all five tax-managed funds for a minimum initial investment of $10,000. Currently, Admiral Shares are offered in only two of the funds for a minimum investment of $100,000. Investor Shares of the funds, which currently have a minimum initial investment of $10,000, will no longer be offered."
Randy

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Re: Another Update

Post by rylemdr » Sat Jun 25, 2011 7:35 pm

EyeDee wrote:.
Vanguard recently changed the Tax-Managed funds Admiral requirements from the announcement I posted above:

https://personal.vanguard.com/us/insigh ... t-04282011

"Effective May 13, 2011, Admiral Shares will be available for all five tax-managed funds for a minimum initial investment of $10,000. Currently, Admiral Shares are offered in only two of the funds for a minimum investment of $100,000. Investor Shares of the funds, which currently have a minimum initial investment of $10,000, will no longer be offered."
Even better news!

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Re: Admiral Shares vs Investor Shares?

Post by nisiprius » Sat Jun 25, 2011 8:58 pm

rylemdr wrote:
nisiprius wrote:If you are holding your funds directly at Vanguard, if your balance on an Investor shares fund exceeds $10,000 Vanguard will eventually automatically convert it to Admiral shares, or you can click on a link and do it yourself.
Is this for real? Can anyone confirm this? No offense to you mr. Nisiprius, just making sure :)
As Gallagher said about his Sledge-O-Matic, "Can it be that easy? Yes (smash!) it's just that easy!"

But seriously, best thing is to call 877-662-7447, M–F 8 a.m. to 10 p.m., Saturday 9 a.m. to 4 p.m., Eastern time. Just do it. No harm in getting oriented here and getting focussed on the questions you want to ask, but Vanguard (like other good firms) answers the phone quickly, and the reps are good on this sort of procedural detail. Don't be afraid to ask.

But I know I'm right, because my wife had some funds that were automatically converted, and I had one that I didn't want to wait on so I clicked the link and got it converted overnight.
So if I had 3k to invest, I should put it in early(instead of waiting for my money to reach 10k) because when I eventually reach 10k, the expense ratio will be lowered anyway. Correct?
Absolutely.

But, sorry to be a curmudgeon about it, but if you do the math, which you should, the difference between (say) an 0.18% ER on Investor shares of Total Stock Market, and 0.07% on Admiral shares is really not such a great big deal.
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Post by amdmaxx » Sat Jun 25, 2011 9:58 pm

I can confirm as well. Done it manually a few times on the web site, since I didn't want to wait.

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Post by joe8d » Sat Jun 25, 2011 10:48 pm

Just pack your lunch one day.
Well stated. Admiral shares provide a slightly higher dividend yield than Investor shares.That's the only difference.
All the Best, | Joe

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Post by 555 » Sat Jun 25, 2011 11:47 pm

Okay, I think OP has mastered this topic. He's ready for the next step. :?
http://www.bogleheads.org/forum/viewtopic.php?t=77199

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Post by rylemdr » Sun Jun 26, 2011 12:40 am

555 wrote:Okay, I think OP has mastered this topic. He's ready for the next step. :?
http://www.bogleheads.org/forum/viewtopic.php?t=77199
Awww, you read that.. :oops:

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Re: Admiral Shares vs Investor Shares?

Post by mollyD » Mon Mar 07, 2016 5:25 pm

Given that the Admiral shares have slightly better performance/costs, why do the Vanguard Target Date funds hold Investor shares instead of Admiral shares?

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Re: Admiral Shares vs Investor Shares?

Post by hnzw rui » Mon Mar 07, 2016 5:44 pm

mollyD wrote:Given that the Admiral shares have slightly better performance/costs, why do the Vanguard Target Date funds hold Investor shares instead of Admiral shares?
Likely due to account minimums. Vanguard Target Retirement Funds (and STAR) have the lowest minimum ($1K) so higher overhead.

Alas, so far, Vanguard has only made available Institutional Target Retirement ($100M minimum, not as a share class but as different funds altogether) and the ER on that is just around Admiral Shares level.

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It's for real.

Post by Taylor Larimore » Mon Mar 07, 2016 5:53 pm

rylemdr wrote:
nisiprius wrote:If you are holding your funds directly at Vanguard, if your balance on an Investor shares fund exceeds $10,000 Vanguard will eventually automatically convert it to Admiral shares, or you can click on a link and do it yourself.
Is this for real? Can anyone confirm this? No offense to you mr. Nisiprius, just making sure :)
rylemdr:

If nisiprius wrote it, it's for real.

Best wishes.

Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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Re: Admiral Shares vs Investor Shares?

Post by Geologist » Mon Mar 07, 2016 7:47 pm

mollyD wrote:Given that the Admiral shares have slightly better performance/costs, why do the Vanguard Target Date funds hold Investor shares instead of Admiral shares?
Keep in mind that the Target Date funds add no fees of their own. Vanguard has to recover the costs of running the Target Date funds separately (e.g., account administration) from the underlying funds. Theoretically, the Target Date funds could hold Admiral shares, but then charge their own fees to cover their costs and that would probably come out about the same. There is probably a section in the prospectus to the effect that as long as savings in the Target Date fund operations offset the direct costs, the Target Date funds won't charge their own fees. (I don't own Target Date funds but I have owned another fund of funds.) At Admiral share costs, that offset wouldn't work.

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Re: Admiral Shares vs Investor Shares?

Post by SeeMoe » Thu Mar 17, 2016 1:36 pm

dbr wrote:
rylemdr wrote:I'm looking at the types of funds available in the Vanguard website. What are Admiral Shares and Investor Shares? What other differences are there other than a lower expense ratio/higher min-investment, and higher expense ratio/lower min-investment respectively?

I would assume Admiral Shares would encourage "wholesale" purchases while Investor Shares are more "retail". Is this a good analogy?
I would say it is more like a good customer discount. Wholesale would be institutional shares where the threshold is in the few hundred million $ range sold to retirement plans and the like. With reduction in the Admiral minimum there is some discussion why the distinction even exists.
Indeed, I like the the sound of "Admiral" too. Plus Flagship and Admiral cannote a flag officer and his fleet,..FYI: All VPAS clients funds are automatically switched to Admiral status,..!
SeeMoe.. :wink:
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Re: Admiral Shares vs Investor Shares?

Post by Tommy » Thu Mar 17, 2016 1:44 pm

in some cases NAV different for Investor and Admiral, for example Wellington and Wellesly

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NAV differences

Post by Taylor Larimore » Thu Mar 17, 2016 1:55 pm

Tommy wrote:in some cases NAV different for Investor and Admiral, for example Wellington and Wellesly
Tommy:

"NAV" differences are unimportant to investors.

Best wishes.
Taylor
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Re: Admiral Shares vs Investor Shares?

Post by alex_686 » Thu Mar 17, 2016 2:14 pm

Geologist wrote:
mollyD wrote:Given that the Admiral shares have slightly better performance/costs, why do the Vanguard Target Date funds hold Investor shares instead of Admiral shares?
Keep in mind that the Target Date funds add no fees of their own. Vanguard has to recover the costs of running the Target Date funds separately (e.g., account administration) from the underlying funds. Theoretically, the Target Date funds could hold Admiral shares, but then charge their own fees to cover their costs and that would probably come out about the same. There is probably a section in the prospectus to the effect that as long as savings in the Target Date fund operations offset the direct costs, the Target Date funds won't charge their own fees. (I don't own Target Date funds but I have owned another fund of funds.) At Admiral share costs, that offset wouldn't work.
Personally I don't like how Vanguard does this. Most fund of funds invest in the institutional class of shares and then charge a separate management fee on top to cover the fund of funds expenses. Vanguard fund invest in the more expense investor share class and then the investor class and then the underlying fund reimburse the fund of funds for their operating expenses.

Probably it does not make much difference but who knows? In the first case the expense is clearly broken out. In Vanguard's case it is buried in such a way that we can't really figure it out.

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Re: Admiral Shares vs Investor Shares?

Post by NMJack » Thu Mar 17, 2016 3:11 pm

Admiral shares are not portable. They can NOT be transferred in-kind to most other brokerages. Investor class shares, in many cases, can be. Of course, the investor pays a 10-12 basis point premium for the typical index fund for this. There is a workaround.

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Fund of Funds Fees

Post by EyeDee » Thu Mar 17, 2016 4:19 pm

.
Alex_686,

Could your provide a reference for your statement that other fund companies use the institutional class for their retail target funds? For example, for Fidelity's Target Retirement funds, the only institutional fund I found referenced was the Institutional Money Market Portfolio Institutional Class. The other funds might be institutional but the annual report I looked at did not list institutional in the other fund names. They might be institutional, but my impression was that most other mutual fund companies uses retail funds for their fund of funds AND charged a separate fee for their retail fund of funds (of course some companies provide institutional versions for 401k such as Vanguard which is another animal), so I would appreciate a reference if you could provide one for a fund company using institutional funds for their retail target funds.

Thank you,
alex_686 wrote: Personally I don't like how Vanguard does this. Most fund of funds invest in the institutional class of shares and then charge a separate management fee on top to cover the fund of funds expenses. Vanguard fund invest in the more expense investor share class and then the investor class and then the underlying fund reimburse the fund of funds for their operating expenses.

Probably it does not make much difference but who knows? In the first case the expense is clearly broken out. In Vanguard's case it is buried in such a way that we can't really figure it out.
Randy

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Re: Fund of Funds Fees

Post by alex_686 » Thu Mar 17, 2016 5:14 pm

EyeDee wrote:Could your provide a reference for your statement that other fund companies use the institutional class for their retail target funds? For example, for Fidelity's Target Retirement funds, the only institutional fund I found referenced was the Institutional Money Market Portfolio Institutional Class. The other funds might be institutional but the annual report I looked at did not list institutional in the other fund names. They might be institutional, but my impression was that most other mutual fund companies uses retail funds for their fund of funds AND charged a separate fee for their retail fund of funds (of course some companies provide institutional versions for 401k such as Vanguard which is another animal), so I would appreciate a reference if you could provide one for a fund company using institutional funds for their retail target funds.
Oddly, Fidelity is the only other fund company that does it the same way that Vanguard does. Everybody else does it the way that I described - Balckrock, Oppenheimer, etc.

What you want to do is look at the prospectus, not the holdings. For both Fiedility and Vanguard it lists is fund expense at zero, which we know can't be true. It goes on to state that the retail shares reimburse the parent company.

I would be interested if you could point me to a mutual fund company that invests in retail shares and charges a management fee on top. That sounds like double dipping to me and the SEC discourages that type of behavior.

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Re: Admiral Shares vs Investor Shares?

Post by Geologist » Thu Mar 17, 2016 5:17 pm

alex_686 wrote:
Geologist wrote:
mollyD wrote:Given that the Admiral shares have slightly better performance/costs, why do the Vanguard Target Date funds hold Investor shares instead of Admiral shares?
Keep in mind that the Target Date funds add no fees of their own. Vanguard has to recover the costs of running the Target Date funds separately (e.g., account administration) from the underlying funds. Theoretically, the Target Date funds could hold Admiral shares, but then charge their own fees to cover their costs and that would probably come out about the same. There is probably a section in the prospectus to the effect that as long as savings in the Target Date fund operations offset the direct costs, the Target Date funds won't charge their own fees. (I don't own Target Date funds but I have owned another fund of funds.) At Admiral share costs, that offset wouldn't work.
Personally I don't like how Vanguard does this. Most fund of funds invest in the institutional class of shares and then charge a separate management fee on top to cover the fund of funds expenses. Vanguard fund invest in the more expense investor share class and then the investor class and then the underlying fund reimburse the fund of funds for their operating expenses.

Probably it does not make much difference but who knows? In the first case the expense is clearly broken out. In Vanguard's case it is buried in such a way that we can't really figure it out.
I really have no idea whether other fund companies invest in institutional classes of shares; I sort of doubt it because many other fund companies don't have institutional classes.

The key question in the end, however, is the total expense ratio (acquired and inherent) for the fund of funds. As you might expect, it is generally lower for Vanguard's funds of funds even though they hold Investor class shares.

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Re: Admiral Shares vs Investor Shares?

Post by alex_686 » Thu Mar 17, 2016 5:33 pm

Geologist wrote:I really have no idea whether other fund companies invest in institutional classes of shares; I sort of doubt it because many other fund companies don't have institutional classes.
I would strongly contest that statement. Can you point me to a fund family that does not have a institutional share class?
Geologist wrote:The key question in the end, however, is the total expense ratio (acquired and inherent) for the fund of funds. As you might expect, it is generally lower for Vanguard's funds of funds even though they hold Investor class shares.
That is not my point. I think Vanguard on balance is a great fund family. However on the issues of disclosers and transparency they are scoring subpar. The target fund could be subsidizing the retail fund or the other way around. Or maybe not. However, because of the way that Vanguard has structured the fees we can't tell rendering the underlying structure opaque.

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Re: Admiral Shares vs Investor Shares?

Post by Geologist » Thu Mar 17, 2016 5:56 pm

alex_686 wrote:
Geologist wrote:I really have no idea whether other fund companies invest in institutional classes of shares; I sort of doubt it because many other fund companies don't have institutional classes.
I would strongly contest that statement. Can you point me to a fund family that does not have a institutional share class?
Geologist wrote:The key question in the end, however, is the total expense ratio (acquired and inherent) for the fund of funds. As you might expect, it is generally lower for Vanguard's funds of funds even though they hold Investor class shares.
That is not my point. I think Vanguard on balance is a great fund family. However on the issues of disclosers and transparency they are scoring subpar. The target fund could be subsidizing the retail fund or the other way around. Or maybe not. However, because of the way that Vanguard has structured the fees we can't tell rendering the underlying structure opaque.
Well, many smaller fund families (although not necessarily small in total assets) don't even have multiple share classes, let alone institutional classes. Dodge & Cox is an example. You may be right that larger fund families usually do, although their institutional expenses are often higher than Vanguard's Investor class (look at Columbia Threadneedle, but I have trouble figuring out what Classes are institutional).

On the transparency question, you and I will just have to agree to disagree. I don't think it is important how the funding works between the fund of funds and the underlying funds given the very low expenses. Further, as you yourself point out, Fidelity does it the same way.

Mailman79
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Re: Admiral Shares vs Investor Shares?

Post by Mailman79 » Wed Jul 04, 2018 12:15 pm

Why do most Vanguard funds with investor and admiral shares show higher returns for investor shares vs admiral shares?

H-Town
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Re: Admiral Shares vs Investor Shares?

Post by H-Town » Wed Jul 04, 2018 12:20 pm

Mailman79 wrote:
Wed Jul 04, 2018 12:15 pm
Why do most Vanguard funds with investor and admiral shares show higher returns for investor shares vs admiral shares?
It should be the other way around. Admiral shares return is higher than that of investor shares. The difference is fees.

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CABob
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Re: Admiral Shares vs Investor Shares?

Post by CABob » Wed Jul 04, 2018 12:27 pm

Mailman79 wrote:
Wed Jul 04, 2018 12:15 pm
Why do most Vanguard funds with investor and admiral shares show higher returns for investor shares vs admiral shares?
I doubt that this is true if you are making a valid comparison between funds.
Bob

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grabiner
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Re: Admiral Shares vs Investor Shares?

Post by grabiner » Wed Jul 04, 2018 2:04 pm

Mailman79 wrote:
Wed Jul 04, 2018 12:15 pm
Why do most Vanguard funds with investor and admiral shares show higher returns for investor shares vs admiral shares?
You may be looking at since-inception returns for different share classes, which is not a fair comparison.

Over a single day, Investor shares can outperform because of rounding, If Investor shares go from 10.044 to 10.046, that rounds to a one-cent gain, while Admiral shares at twice the price go from 20.088 to 20.092, which rounds to zero.

You might also find higher returns for Investor shares of some funds if you look at a price chart. The Admiral shares pay a higher dividend because they have lower expenses, but the returns in the price chart should be equal, and the Investor shares might come out ahead because of rounding or dividend accrual. The actual returns, including dividends, will always be higher for the lower-cost share class over any significant time period.
Wiki David Grabiner

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