Vanguard News

We want to share some good news from Vanguard for all of you who own Vanguard Index funds in your Ameritrade accounts.  

As of the end of July, Vanguard is eliminating the Investor share class of all index mutual funds. That is the share class that most of you own currently.  That share class will be replaced with the Admiral share class, Vanguard’s lowest expense share class available outside of employer-sponsored plans.  As an example, Vanguard Index 500 (their largest index fund) carries an expense ratio of .14% for the Investor share class and .04% for the Admiral share class.  Obviously, that’s not a huge dollar difference since Vanguard Index funds are already very inexpensive, but in percentage terms, it’s a huge discount!  

If you own a Vanguard Index fund at Ameritrade, some time the week of July 22, you will see a new mutual fund in your account.  Then the week of July 29th, your current index fund balance will be transferred to the new mutual fund.  This is a tax-free conversion and any Ameritrade commissions will be paid for by Vanguard.  

For those of you who have automatic purchases or redemptions of Vanguard Index funds, we will ensure that they are reset to the new funds and that your transactions continue with no interruption. 

Competition in the index fund market is very intense and expense ratios are dropping in response.  Some good news for us as investors!  

As always, if you have any questions, don’t hesitate to call or email us.