Wednesday, October 6, 2010

Vanguard Cuts Fund Fees Further

There's some great news out there today for individual investors: Vanguard, the index fund giant, has announced that they are cutting fees further on most of their index fund offerings. They are doing this by cutting the minimum investment required for their Admiral shares. Before the cut, it required $100,000 to invest in the Admiral shares but now it will only be $10,000. Amazingly, the AP report states:

"For example, Admiral shares of Vanguard's Total Stock Market Index Fund will charge $7 in annual expenses for every $1,000 invested, provided an investor has at least $10,000 in the fund. That's down from $18 in annual expenses for Investor shares in the $138 billion fund, which requires a minimum of $3,000."

Yes, that's only $7 in annual expenses for every $1,000 invested or about 0.007%! It's important to remember that these fees are deducted directly from the fund's assets and are not charged so that you have to write a check to cover the expense amount. Overall, this is fantastic news for retail investors who have seen fees and expenses skyrocket in recent years. It's clear that Vanguard "gets it"!

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