Vanguard cuts mutual fund minimums
Single Shares will be more accessible now
Exchange traded funds and mutual funds often possess fees and investment minimums, and it is important to be familiar with these figures.
The Vanguard Group has reduced the investment minimums for its share class called the “Signal Shares.” The previous requirement was $1 million to $5 million in assets depending on the client and account type.
The changes will make Signal Shares more accessible to financial intermediaries, advisors, and select institutional clients, including investment-only defined contribution plans, defined benefit plans, endowments, and foundations.
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Compared to Vanguard’s exchange traded funds, the fees for Signal Shares are very similar. For example, the Vanguard S&P 500 ETF (VOO) charges annual expenses of 0.06% whereas the Signal Shares for the same index charge 0.07%. In certain cases, the annual fees for Signal Shares are identical to Vanguard’s ETFs on indexes following emerging markets, the total U.S. bond market and the total U.S. stock market.
“Vanguard is continually seeking to bring greater value to our investors – whether they invest directly, with a financial advisor, or through an employer- sponsored retirement plan,” said Vanguard CEO Bill McNabb.
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McNabb noted that in the last three months, the Valley Forge, PA-based investment firm has unveiled low-cost ETFs based on S&P and Russell benchmarks for advisors, lowered the threshold to qualify for its ultra-low-cost Admiral Shares for individual investors, and proposed Institutional Plus Shares for nine index funds for institutional clients.
“Low expense ratios are the tangible benefit of investing with a client-owned company,” said Mr. McNabb. “As long as the economics permit, Vanguard will continue to seek to lower the cost of investing.”
Vanguard offers Signal Shares for 25 of its index funds
Vanguard Financial Advisor Services has been serving advisors since 1983 and oversees $450 billion in assets, or more than one-quarter of Vanguard’s total U.S. fund assets under management. Of those assets, $135 billion is invested in Vanguard’s 63 exchange traded funds.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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