Vanguard 2014 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 2014, 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 2014 passive funds brokerage expense averaged nil (range: nil to .017%), compared to active expense of 0.05% (range .01% to 0.17%). [note 1] Note that the tables include tabs with charts providing annual Vanguard index fund commission ratios over the 1994 - 2014 period and Vanguard active fund commission ratios over the 1994 - 2014 period.

Vanguard Fund Brokerage Commission Expense (2014)
Passive Funds [1]
Fund Brokerage commission
$
Commission ratio
Pct.
Annual change
Vanguard 500 Index $742,000 .000% .000%
Vanguard Dividend Appreciation Index[note 2] $128,000 .001% -.001%
Vanguard Extended Market Index $1,152,000 .003% .-001%
Vanguard FTSE Social Index $8,000 .001% -.002%
Vanguard Growth Index $265,000 .001% -.002%
Vanguard High Yield Dividend Index $78,000 .001% -.002%
Vanguard Large-Cap $58,000 .000% .000%
Vanguard Mid-Cap Index $840,000 .002% -.004%
Vanguard Mid-Cap Growth Index $68,000 .001% -.004%
Vanguard Mid-Cap Value Index $138,000 .002% -.005%
Vanguard REIT Index [note 3] $1,723,000 .004% .001%
Vanguard Small-Cap Index $1,538,000 .003% -.009%
Vanguard Small-Cap Growth Index $805,000 .005% -.009%
Vanguard Small-Cap Value $410,000 .003% .010%
Vanguard Tax-Managed Capital Appreciation[note 4] $135,000 .017% .016%
Vanguard Tax-Managed Small-Cap $591,000 .004% -.004%
Vanguard Total Stock Market Index $5,671,000 .002% .000%
Vanguard Value Index $169,000 .001% .001%
Vanguard Developed Market Index[note 5] $1,655,000 .004% -.002%
Vanguard Emerging Markets Stock Index $5,370,000 .009% -.016%
Vanguard European Stock Index $680,000 .003% -.003%
Vanguard FTSE All-World ex-US Index $791,000 .004% .000%
Vanguard FTSE All-World ex-US Small Cap $290,000 .012% .006%
Vanguard Global ex-US Real Estate $331,000 .017% .003%
Vanguard Pacific Stock Index $118,000 .002% -.006%
Vanguard Total International Stock Index $9,577,000 .008% -.002%
Vanguard Total World Stock Index $233,000 .017% -.001%


Vanguard Fund Brokerage Commission Expense (2014)
Active Funds [1]
Fund Brokerage commission
$
Commission ratio
Pct.
Annual change
Vanguard Capital Opportunity $1,091,000 0.01% -0.01%
Vanguard Capital Value $1,717,000 0.10% -0.09%
Vanguard Dividend Growth $2,410,000 0.01% 0.00%
Vanguard Energy $3,392,000 0.03% -0.01%
Vanguard Equity Income $1,899,000 0.01% -0.01%
Vanguard Explorer $11,358,000 0.09% -0.02%
Vanguard Explorer Value $298,000 0.11% -0.05%
Vanguard Growth & Income $781,000 0.01% -0.01%
Vanguard Health Care [note 6] $5,310,000 0.01% 0.01%
Vanguard Mid Cap Growth $3,284,000 0.11% -0.04%
Vanguard Morgan Growth $2,422,000 0.02% -0.01%
Vanguard Precious Metals & Mining $1,663,000 0.07% -0.02%
Vanguard Primecap Core[note 7] $1,408,000 0.02% 0.01%
Vanguard Primecap [note 8] $5,678,000 0.01% 0.0%
Vanguard Selected Value [note 9] $4,906,000 0.06% -0.02%
Vanguard Strategic Equity $478,000 0.01% -0.01%
Vanguard Strategic Small Cap $74,000 0.02% -0.01%
Vanguard U.S. Growth $1,175,000 0.02% 0.00%
Vanguard U.S. Value [note 10] $51,000 0.01% -0.01%
Vanguard Windsor $6,516,000 0.04% -0.01%
Vanguard Windsor ll $14,789,000 0.03% -0.01%
Vanguard Emerging Market Select Stock $457,000 0.17% -0.03%
Vanguard Global Equity $2,270,000 0.05% -0.02%
Vanguard Global Minimum Volatility $200,000 0.05%
Vanguard International Explorer $2,684,000 0.10% -0.01%
Vanguard International Growth $9,159,000 0.04% -0.02%
Vanguard International Value $5,822,000 0.07% -0.03%

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. Balanced fund commission expense in 2014 was very low (ranging from nil to .012%). Keep in mind that a fund of funds will also bear the commission brokerage costs of the underlying portfolios.

Vanguard balanced fund of funds include the series of Lifestrategy funds; the series of target retirement funds; the of Managed Payout fund; 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 (2014)
Balanced Funds [1]
Fund Brokerage commission
$
Commission ratio
Pct.
Annual change
Vanguard Balanced Index [note 11] $230,000 .001% .000%
Vanguard LifeStrategy Conservative $0 .000% .000%
Vanguard LifeStrategy Growth $0 .000% .000%
Vanguard LifeStrategy Income $0 .000% .000%
Vanguard LifeStrategy Moderate $0 .000% .000%
Vanguard Managed Payout Fund [note 12] $68,000 .005% .004%
Vanguard STAR $0 .000% .000%
Vanguard Target Retirement 2010 $0 .000% .000%
Vanguard Target Retirement 2015 $0 .000% .000%
Vanguard Target Retirement 2020 $0 .000% .000%
Vanguard Target Retirement 2025 $0 .000% .000%
Vanguard Target Retirement 2030 $0 .000% .000%
Vanguard Target Retirement 2035 $0 .000% .000%
Vanguard Target Retirement 2040 $0 .000% .000%
Vanguard Target Retirement 2045 $0 .000% .000%
Vanguard Target Retirement 2050 $0 .000% .000%
Vanguard Target Retirement 2055 $0 .000% .000%
Vanguard Target Retirement 2060 $0 .000% .000%
Vanguard Target Retirement Income $0 .000% .000%
Vanguard Tax- Managed Balanced $14,000 .001% .000%
Vanguard Wellesley $2,742,000 .007% .001%
Vanguard Wellington $10,139,000 .012% -.007%

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;[note 13]
  • 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.

Data spreadsheets

Multiple year brokerage expense data is available in the spreadsheet tables below.

Passive table

(View Google Spreadsheet in browser, then File --> Download as to download the file.)
Active table

(View Google Spreadsheet in browser, then File --> Download as to download the file.)
Balanced table

(View Google Spreadsheet in browser, then File --> Download as to download the file.)

Notes

  1. Chart: Average Commission Expense Ratio

    google drive spreadsheet
  2. A lower level of index rebalancing in the Vanguard Dividend Appreciation Fund's target index during the fiscal year ended January 31, 2014, resulted in less trading within the Fund's portfolio as compared to prior years and led to a decrease in brokerage commissions for the year.
  3. The increase in brokerage commissions during the fiscal year ended January 31, 2014, was due to the costs associated with the Vanguard REIT Index Fund's investments in swaps, which were used to maintain economic exposure to certain REITs included in the Fund's target index.
  4. The increase in brokerage commissions for the fiscal year ended December 31, 2014, was a result of the trading strategies employed by the Vanguard Tax-Managed Capital Appreciation Fund's advisor to offset capital gains.
  5. The merger of Tax-Managed International Fund and Developed Markets Index Fund in the fiscal year ended December 31, 2014, resulted in increased brokerage commissions for that year.
  6. Vanguard Health Care Fund: The Fund experienced higher brokerage commissions for the fiscal year ended January 31, 2014, due to a change in the advisor’s trading strategy.
  7. Vanguard Primecap Core Fund: Higher brokerage commissions paid during the fiscal year ended September 30, 2014, were due to increased trading activity in the Fund’s portfolio.
  8. Vanguard Primecap Fund: Increased trading activity during the fiscal year ended September 30, 2014, resulted in higher turnover, which led to an increase in brokerage commissions for the year.
  9. Vanguard Selected Value Fund: The increase in brokerage commissions for the most recent fiscal years was attributable to an increase in Fund assets.
  10. Vanguard U.S. Value Fund: Lower brokerage commissions paid during the fiscal year ended September 30, 2014, were due to a change in the advisor’s trading strategy that resulted in the decrease of explicit brokerage commissions.
  11. The brokerage commissions paid by the Vanguard Balanced Index Fund during the past two fiscal years have increased proportionately with the growth of the Fund.
  12. The increase in brokerage commissions for the fiscal year ended December 31, 2014, was as a result of the Vanguard Managed Payout Fund pursuing commodity-related investments through exposure to an exchange-traded fund.
  13. Portfolio turnover and cash flows into the following funds, which impact the frequency of the funds' portfolio transactions, were factors during recent fiscal years and resulted in higher or lower brokerage commissions:
    • FTSE All-World ex-US Small-Cap Index Fund
    • Global ex-U.S. Real Estate Index Fund
    • Total World Index Fund

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.