Vanguard 2011 brokerage commission expense

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Mutual funds that buy and sell stock incur brokerage commissions on these transactions. This transactional cost is not included in a fund's expense ratio, but the cost is reported in a fund's annual statement of additional information to the fund prospectus. Additional fund transactions costs, such as spread costs and market impact costs can be much higher than brokerage expense, but these costs are not reported and must be estimated.

Brokerage commission expense

The tables below provide Vanguard passive and active fund brokerage expense for 2011, both in absolute dollars and as a "commission ratio" (brokerage commission divided by average net assets). The tables are divided among index and passive tax-managed stock funds and actively managed stock funds. In 2011 passive fund's brokerage expense averaged .01% (range: nil to .03%), compared to active expense of 0.08% (range .01% to 0.23%).

Vanguard Fund Brokerage Commission Expense (2011)
Passive Funds [1]
Fund Brokerage commission
$
Commission ratio
Pct.
Vanguard 500 Index $688,000 .001%
Vanguard Dividend Appreciation Index $66,000 .001%
Vanguard Extended Market Index $1,040,000 .006%
Vanguard FTSE Social Index $8,000 .002%
Vanguard Growth Index $382,000 .002%
Vanguard High Yield Dividend Index $94,000 .005%
Vanguard Large-Cap Index $90,000 .002%
Vanguard Mid-Cap Index $1,162,000 .004%
Vanguard Mid-Cap Growth Index $117,000 .005%
Vanguard Mid-Cap Value Index $105,000 .007%
Vanguard REIT Index $1,051,000 .003%
Vanguard Small-Cap Index $1,834,000 .007%
Vanguard Small-Cap Growth Index $946,000 .011%
Vanguard Small-Cap Value Index $517,000 .007%
Vanguard Tax-Managed Growth and Income $19,000 .001%
Vanguard Tax-Managed Capital Appreciation $34,000 .001%
Vanguard Tax-Managed Small-Cap $258,000 .013%
Vanguard Total Stock Market Index $4,704,000 .003%
Vanguard Value Index $276,000 .002%
Vanguard Developed Market Index $695,000 .006%
Vanguard Emerging Markets Stock Index $6,094,000 .010%
Vanguard European Stock Index $187,000 .002%
Vanguard FTSE All-World ex-US Index $661,000 .005%
Vanguard FTSE All-World ex-US Small Cap Index $219,000 .019%
Vanguard Global ex-US Real Estate $53,000 .031%
Vanguard Pacific Stock Index $63,000 .001%
Vanguard Tax-Managed International $184,000 .002%
Vanguard Total International Stock Index $7,647,000 .014%
Vanguard Total World Stock Index $108,000 .008%


Vanguard Fund Brokerage Commission Expense (2011)
Active Funds [1]
Fund Brokerage commission
$
Commission ratio
Pct.
Vanguard Capital Opportunity $2,603,000 0.03%
Vanguard Capital Value $1,816,000 0.21%
Vanguard Dividend Growth $1,252,000 0.02%
Vanguard Emerging Market Select Stock $46,000 0.13%
Vanguard Energy $5,583,000 0.04%
Vanguard Equity Income $1,206,000 0.04%
Vanguard Explorer $15,573,000 0.16%
Vanguard Explorer Value $171,000 0.15%
Vanguard Growth & Income $3,829,000 0.09%
Vanguard Growth Equity $424,000 0.06%
Vanguard Health Care $1,908,000 0.01%
Vanguard Mid Cap Growth $4,071,000 0.23%
Vanguard Morgan Growth $4,061,000 0.05%
Vanguard Precious Metals & Mining $3,005,000 0.06%
Vanguard Primecap Core $1,089,000 0.02%
Vanguard Primecap $6,241,738 0.02%
Vanguard Selected Value $2,482,000 0.06%
Vanguard Strategic Equity $2,127,000 0.06%
Vanguard Strategic Small Cap $119,000 0.05%
Vanguard U.S. Growth $2,532,000 0.07%
Vanguard U.S. Value $120,000 0.02%
Vanguard Windsor $11,336,000 0.09%
Vanguard Windsor ll $14,968,000 0.04%
Vanguard International Explorer $3,460,000 0.05%
Vanguard Global Equity $2,857,000 0.07%
Vanguard International Growth $20,556,000 0.11%
Vanguard International Value $7,572,000 0.10%

Balanced funds and fund of funds

Main article: Balanced fund

Balanced mutual funds which buy and sell individual stocks pay brokerage commissions on the stock portion of the portfolio. A fund of funds does not ordinarily pay brokerage commissions on its buys and sells of the underlying mutual fund portfolios; but a fund of funds does incur brokerage expense for its purchases or sales of an ETF. In 2011 the Vanguard Target Retirement funds incurred brokerage commission expense for ETF transactions. [2]. Balanced fund commission expense in 2011 was very low (ranging from nil to .022%). Keep in mind that a fund of funds will also bear the commission brokerage costs of the underlying portfolios.

Vanguard fund of funds include the series of Lifestrategy funds; the series of target retirement funds; the series of Managed Payout funds; and the STAR fund. The majority of Vanguard balanced funds are indexed, or mostly indexed. Active balanced funds include the STAR, Wellesley, and Wellington funds.

Vanguard Fund Brokerage Commission Expense (2011)
Balanced Funds [1]
Fund Brokerage commission
$
Commission ratio
Pct.
Vanguard Balanced Index $209,000 .002%
Vanguard LifeStrategy Conservative $0 .000%
Vanguard LifeStrategy Growth $0 .000%
Vanguard LifeStrategy Income $0 .000%
Vanguard LifeStrategy Moderate $0 .000%
Vanguard Managed Payout Distribution $1,000 .000%
Vanguard Managed Payout Growth & Distribution $1,000 .000%
Vanguard Managed Payout Growth $1,000 .000%
Vanguard STAR $0 .000%
Vanguard Target Retirement 2010 $34,500 .001%
Vanguard Target Retirement 2015 $126,000 .001%
Vanguard Target Retirement 2020 $105,000 .001%
Vanguard Target Retirement 2025 $177,000 .001%
Vanguard Target Retirement 2030 $91,500 .001%
Vanguard Target Retirement 2035 $141,000 .001%
Vanguard Target Retirement 2040 $57,000 .001%
Vanguard Target Retirement 2045 $73,500 .001%
Vanguard Target Retirement 2050 $22,500 .001%
Vanguard Target Retirement 2055 $9 .000%
Vanguard Target Retirement Income $19,500 .000%
Vanguard Tax- Managed Balanced $8,000 .001%
Vanguard Wellesley $2,328,000 .011%
Vanguard Wellington $11,939,000 .022%

Factors determining brokerage expense

Vanguard provides notes in the statement of additional information that attribute reasons behind higher and lower levels of brokerage expense for a given fund[/s]. Factors can include:

  • An increase or decrease in fund turnover;
  • An increase in shareholder flows into or out of the portfolio;
  • An increase or decrease in market volatility.

A new fund, with low net assets, will often have a higher than average "commission ratio" than similar funds with higher asset bases.

See also

References

  1. 1.0 1.1 1.2 Data sources: EDGAR, commission data from statements of additional information forms 485BPOS; average net asset data from forms NSAR.
  2. See, statement of additional information for the Chester funds, 2012 Prospectus , retrieved 18 May, 2012.