https://www.sec.gov/Archives/edgar/data/36405/000093247118007441/ps_adm112018final.htm(this change appears to affect the index type funds)
497 1 ps_adm112018final.htm ADMIRAL SHARES MINIUM.
Vanguard 500 Index Fund
Vanguard Balanced Index Fund
Vanguard Developed Markets Index Fund
Vanguard Dividend Appreciation Index Fund
Vanguard Emerging Markets Government Bond Index Fund
Vanguard Emerging Markets Stock Index Fund
Vanguard European Stock Index Fund
Vanguard Extended Market Index Fund
Vanguard FTSE All-World ex- US Index Fund
Vanguard Global ex-U. S. Real Estate Index Fund
Vanguard Growth Index Fund
Vanguard Intermediate-Term Bond Index Fund
Vanguard Intermediate-Term Corporate Bond Index Fund
Vanguard Intermediate-Term Treasury Index Fund
Vanguard International Dividend Appreciation Index Fund
Vanguard International High Dividend Yield Index Fund
Vanguard Large-Cap Index Fund
Vanguard Long- Term Corporate Bond Index Fund
Vanguard Long- Term Treasury Index Fund
Vanguard Mid -Cap Growth Index Fund
Vanguard Mid -Cap Index Fund
Vanguard Mid-Cap Value Index Fund
Vanguard Mortgage -Backed Securities Index Fund
Vanguard Pacific Stock Index Fund
Vanguard Real Estate Index Fund
Vanguard Short-Term Bond Index Fund
Vanguard Short-Term Corporate Bond Index Fund
Vanguard Short-Term Inflation -Protected Securities Index Fund
Vanguard Short-Term Treasury Index Fund
Vanguard Small- Cap Growth Index Fund
Vanguard Small- Cap Index Fund
Vanguard Small- Cap Value Index Fund
Vanguard Tax-Exempt Bond Index Fund
Vanguard Total Bond Market Index Fund
Vanguard Total International Bond Index Fund
Vanguard Total International Stock Index Fund
Vanguard Total Stock Market Index Fund
Vanguard Value Index Fund
Supplement to the Prospectuses and Summary Prospectuses for Investor Shares and Admiral"Shares
Effective November 19, 2018, (i) Admiral Shares have an investment minimum of $3,000, and (ii) Investor Shares are generally closed to new investors. Investor Shares will remain open to existing investors and certain new institutional investors. You may convert your Investor Shares to Admiral Shares at any time by contacting Vanguard.
It is anticipated that all of the outstanding Investor Shares will be automatically converted to Admiral Shares beginning in April 2019, with the exception of those held by Vanguard funds and certain other institutional investors. At that time, Investor Shares will be available for ongoing investment only by Vanguard funds and certain other institutional investors.
© 2018 The Vanguard Group, Inc. All rights reserved.
Vanguard Marketing Corporation, Distributor.
PS ADM 112018
Comments
Converting to Admiral Shares
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You can now own lower-cost Admiral™ Shares for almost 40 of our index mutual funds for a minimum of just $3,000 each.
If higher minimums were keeping you from converting, select Yes below to find out if you can start saving money today.
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When you convert from Investor Shares to Admiral Shares, you're still invested in the same mutual fund but you keep more of your investment returns thanks to lower expense ratios.
For example, would you rather invest $50,000 in:
•Investor Shares, which would cost an average of $90 a year? Or...
•Admiral Shares, which would cost an average of $55 a year?*
A $35 difference may not seem like much, but imagine how that might add up over time. Consider this hypothetical example:
Assume you invest $50,000 and hold onto it for 10 years (no additions, no withdrawals). The investment earns an average annual return of 6%, and the $35 annual expense ratio difference holds true the entire time. After 10 years, your Admiral Shares investment could be worth about $600 more than if it were in Investor Shares. (This doesn’t represent any particular investment; your actual savings could be higher or lower. The rate of return is not guaranteed.)
Admiral Shares minimum investment requirements
Minimums are assessed per fund, per account:
•Most index funds start at $3,000.
•Most actively managed funds start at $50,000.
•Some sector-specific index funds start at $100,000.
Fund-specific minimums can be found in each fund's profile.
After the conversion
You'll pay no taxes or fees on the conversion because you're simply moving money within the same fund.
But if you're invested in an actively managed fund or any other fund that offers both Admiral and Investor Shares, we may reclassify you back to Investor Shares if your investment drops below the Admiral Shares minimum.
Learn how converted shares are priced
Do you want to convert to Admiral Shares now?
*Vanguard Investor Shares average expense ratio: 0.18%. Vanguard Admiral Shares average expense ratio: 0.11%. All averages are asset-weighted. Source: Vanguard, as of December 31, 2017.
Regards,
Ted
https://pressroom.vanguard.com/news/Press-Release-Vanguard-Lowers-Investment-Minimum-of-Admiral-Shares-111918.html
We're not talking about the cost of buying and selling shares here - that's covered by early redemption fees and in rare cases purchase fees (not loads). But we're looking at the servicing costs of small accounts. IMHO there isn't any difference between servicing a small index fund account and a small active fund account. Vanguard sends out the same annual prospectuses, handle similar size transactions, send out the same monthly/quarterly statements, etc.
So why cut the fees on small index funds accounts but not on small active fund accounts? Could it be that Vanguard is facing competition on the former but not the latter? That's not exactly pricing according to cost (Vanguard's mantra), but pricing according to market forces.
From the PR that Ted linked to: "Admiral Shares were introduced by Vanguard in November 2000 to pass along the cost savings associated with large and long-tenured accounts". Now those large and long-tenured accounts will no longer get a break.
Here's a "hidden in plain sight" gotcha: "It is anticipated that all of the outstanding Investor Shares will be automatically converted to Admiral Shares beginning in April 2019, with the exception of those held by Vanguard funds"
So the Life Strategy (fixed allocation) and Target Date (glide path allocation) funds will continue to skim 10+ basis points as they continue to own Investor class shares of their underlying index funds (VFINX ER = 0.14%, VFIAX ER = 0.04%).
Fidelity's explicit management fee of 0.10% (0.08% with waiver) per prospectus on FFNOX begins to look more and more respectable. It's not hiding this fee by using high priced underlying funds (the average ER of the underlying funds is 0.03%).
More from Vanguard's PR piece: "The firm was also an early proponent of ETFs as a means to broaden the availability of passive strategies"
Yeah, sure, whatever.
https://www.morningstar.com/videos/901729/vanguard-minimum-investment-cuts-overdue.html
Asking because one option is just to wait till April 2019...
And I hope this is not going to mess up tax basis calculations. The ONE issue I have with Vanguard is they don't know how to do rounding. And I mean it by any stretch of imagination. What they report as cost expense is significantly different than what I track with Quicken. Schwab, Fidelity, etc. no issue. Vanguard is impossible.
Now if we convert to admiral shares I hope the number of shares will stay the same. If not I have a good mind to by admiral shares wait a month and then sell existing shares. Especially if fund is not closed, sell before distribution and by admiral shares after distribution.
You only get the same number of shares if the prices of the two share classes are the same. I've done a few conversions; only once have I lucked out like that.
For example, VBMFX and VBLTX are trading at the same price. So you'd have the same number of shares after conversion.
But VTSMX is trading at $60.96 while VTSAX is trading at $60.99. If you had 100 shares of VTSMX (worth $6,096), don't expect to get upgraded to 100.000 shares of VTSAX (worth $6,099). Expect to get about 0.049 shares less (that makes up the $3 difference). At least if I've kept track of my decimal places correctly.
It's not a big deal. If you paid $5,000 for the investor shares, then the total cost of your admiral shares after conversion is still $5,000. If you sell all your shares, you declare your cost basis as $5,000 regardless of how many admiral shares that is.
In the end, regardless of what Vanguard or any other financial institution reports to the IRS, it's your responsibility, not theirs, to get the numbers right. If you think Vanguard has erred, the IRS has a box where you can say so and put down your figure.
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You're suggesting two completely different buy/sell sequences:
1) Buy admiral shares (doubling your exposure), wait one month (presumably to avoid wash sale rule), and then sell investor shares
2) Sell investor shares before distribution (bringing your exposure to zero), wait until ex-div date, and then buy admiral shares
If you have gains, then #2 might make some sense. Though you're be recognizing all the gain. In contrast, if you do a direct conversion, you'll have the divs to deal with (they're usually qualified), but that should be relatively small compared to the cap gains you'd be deferring by doing the conversion.
Still, if you're adamant on keeping your records simplified, it has some merit. (You'd only be deferring taxes on the cap gains by doing the conversion, not eliminating them permanently.)
Vanguard High Dividend Yield Index Fund
https://www.sec.gov/Archives/edgar/data/1004655/000093247118007445/merged.htm
Vanguard FTSE All-World ex-US Small-Cap Index Fund
Vanguard Total World Stock Index Fund
https://www.sec.gov/Archives/edgar/data/857489/000093247118007443/merged.htm
Vanguard Long-Term Bond Index Fund
https://www.sec.gov/Archives/edgar/data/794105/000093247118007444/lt_bondindexmerge.htm
Vanguard FTSE Social Index Fund
https://www.sec.gov/Archives/edgar/data/52848/000093247118007442/worldmarvel485a.htm
Our index funds changed investing forever. Now we’re making them even better.
Fund newsNovember 19, 2018
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If you’re like many successful investors, you like to keep it simple. That means saving consistently in low-cost, straightforward investments like index funds. We get it. We pioneered index investing for individuals. Simplicity, transparency, and low fees are core to who we are. And we’re constantly looking for ways to build on those values.
That’s why we’re making a change.
We’re lowering costs for more than 1 million current index fund investors and giving new investors one more reason to choose Vanguard. To do that, we’re dropping the minimum investment for Admiral™ Shares on 38 index funds.
Our Admiral Shares were previously available to investors with over $10,000 per fund. Now you’ll only need $3,000 to take advantage of the low expense ratios Admiral Shares offer. In turn, we’re eliminating higher-cost Investor Shares of those same index funds for individual investors.*
What this means for you
Whether you’re just starting out, adding to your portfolio, or catching up, this change can help you:
Reach your goals faster. Lower expense ratios mean more of your returns stay in your account, so it can grow faster. For example, $50,000 invested in Investor Shares might cost an average of $90 per year versus $55 per year in Admiral Shares. A $35 difference might not sound like much. But when it’s compounded over 10 years, it can add over $600 to your bottom line.**
Diversify your portfolio. When choosing how to allocate your money, you’ll have more flexibility to diversify. For example, if you have $10,000 to invest, you can still put it in a single index fund. Or you can split it up into 3 different index funds and get the same low-cost benefits.
If you currently own Investor Shares of any affected funds, you don’t have to do anything. We’ll convert them to Admiral Shares over the next year. Or you can immediately and easily convert your shares using our online process.
Already own Admiral Shares? The change doesn’t affect your current investments. But if you choose to purchase a new fund in the future, you don’t need $10,000 to get the same low expense ratio you’re used to. And you can be sure we’ll continue to look for the best ways to lower costs and help you meet your investment goals.
On a mission to give investors the best chance for success
Vanguard’s story begins with low costs but it doesn’t end there. Vanguard is built for investors. As a client-owned† firm, everything we do is because we care about our clients, want them to succeed, and have no competing loyalties.
This change is one more way we’re looking out for investors. It will allow us to deliver an estimated $71.2 million in savings to clients.††
“No other firm in the industry has demonstrated Vanguard’s track record of delivering cost savings and value to its clients,” said Vanguard CEO Tim Buckley. “Our unique, client-owned structure enables us to consistently pass along economies of scale and lower the cost of investing for our clients, so they keep more of their returns.”
See which index funds now offer $3,000 minimum investments for Admiral Shares
*Investor Shares will still be used in certain situations, such as in retirement plans and fund-of-funds investments.
**Vanguard Investor Shares average expense ratio: 0.18%. Vanguard Admiral Shares average expense ratio: 0.11%. All averages are asset-weighted. Source: Vanguard, as of December 31, 2017. This hypothetical example assumes a $50,000 investment held for 10 years, with an average return of 6%. It doesn’t represent any particular investment. Your actual savings could be higher or lower. The rate is not guaranteed.
†Vanguard is client-owned. As a client-owner, you own the funds that own Vanguard.
††Estimated savings for the identified funds is the difference between the Investor and Admiral expense ratios multiplied by eligible average assets under management (AUM). Eligible average AUM is based on the daily average assets over the past 12 months (November 2017 to October 2018).