Vanguard variable annuity costs

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The following tables compare Vanguard variable annuity costs with those of its corresponding investor class mutual funds. The first table looks at subaccount and mutual fund expense ratios. The second table includes the VA insurance cost loadings for the basic accumulated value option. The third table provides the effective expense ratio of the VA for basic accumulated value contracts valued below $25,000 and subject to the $25 annual maintenance fee.


Table 1. Comparative Costs: Vanguard VA vs. Vanguard Mutual Funds (FY 2018)
Subaccount Subaccount ER Mutual Fund ER Difference
Money Market 0.16% 0.16% 0.00%
ST Inv Grade 0.16% 0.20% -0.04%
Total Bond Inx 0.13% 0.15% -0.02%
HY Corp 0.26% 0.23% +0.03%
Global Bond Inx 0.12% n/a 0.00%
Balanced 0.21% 0.25% -0.04%
Conservative 0.12% 0.12% 0.00%
Moderate 0.12% 0.13% -0.01%
Equity Income 0.29% 0.26% +0.03%
Div Value 0.25% 0.23% +0.02%
Total Stock Inx 0.13% 0.14% -0.01%
Equity Inx 0.13% 0.14% -0.01%
Mid Cap Inx 0.17% 0.17% 0.00%
Growth 0.38% 0.43% -0.05%
Cap Growth 0.34% 0.37% -0.03%
Sm Co Growth 0.32% 0.44% -0.12%
REIT Inx 0.25% 0.26% -0.01%
International 0.37% 0.45% -0.08%
Total International Inx 0.19% 0.17% +0.02%
Average 0.22% 0.24% -0.02%
Table 2. Comparative Costs: Vanguard VA vs. Vanguard Mutual Funds (FY 2018)
Subaccount Subaccount ER + M&E Mutual Fund ER Difference
Money Market 0.43% 0.16% +0.27%
ST Inv Grade 0.43% 0.20% +0.23%
Total Bond Inx 0.40% 0.15% + 0.25%
HY Corp 0.53% 0.23% +0.30%
Global Bond Inx 0.39% n/a 0.00%
Balanced 0.47% 0.25% +0.22%
Conservative 0.39% 0.13% +0.26%
Moderate 0.39% 0.13% +0.26%
Equity Income 0.56% 0.26% +0.30%
Div Value 0.52% 0.23% +0.29%
Total Stock Inx 0.40% 0.13% +0.27%
Equity Inx 0.40% 0.13% +0.27%
Mid Cap Inx 0.44% 0.17% +0.27%
Growth 0.65% 0.43% +0.22%
Cap Growth 0.61% 0.34% +0.27%
Sm Co Growth 0.59% 0.44% +0.15%
REIT Inx 0.52% 0.26% +0.26%
International 0.64% 0.45% +0.19%
Total International Inx 0.46% 0.19% +0.27%
Average 0.49% 0.24% +0.25%

The 0.27% M&E expense represents Vanguard's accumulated value death benefit. Historically, a return of premium death benefit is available (only at purchase) for an added insurance rider costing 0.05%; and an annual step-up death benefit insurance rider is available (only at purchase) at a 0.12% cost. A Guaranteed Lifetime Withdrawal Benefit (GLWB) rider is available for an additional 1.20% cost.


Table 3. Maintenance Fee Costs
Asset Level Effective ER (accumulated value option)
$5,000 0.99%
$10,000 0.74%
$15,000 0.66%
$20,000 0.62%
$25,000+ 0.49%