Last week, Vanguard officially announced the addition of the Admiral share class to six of their existing index funds. Admiral shares have a higher minimum investment amount ($10,000 for those listed below) than the usual Investor shares ($3,000 for those listed below), but with lower annual expenses. Every time my costs and fees go down, my future performance goes up! Below is a list of the newly-available funds, along with an expense ratio comparison.
| Funds with new Admiral Shares | Investor Shares expense ratio |
Admiral Shares expense ratio (est) |
|---|---|---|
| Vanguard Developed Markets Index Fund | 0.22% | 0.12% |
| Vanguard FTSE All-World ex-US Index Fund | 0.35% | 0.18% |
| Vanguard Mid-Cap Growth Index Fund | 0.26% | 0.10% |
| Vanguard Mid-Cap Value Index Fund | 0.26% | 0.10% |
| Vanguard Small-Cap Growth Index Fund | 0.26% | 0.10% |
| Vanguard Small-Cap Value Index Fund | 0.37% | 0.21% |
The only one I am converting over this time is the Small Value fund. However, I did notice that this now means that for every single Vanguard stock index fund I choose to own, I can choose between both Admiral shares and ETF versions. I like mutual funds because they always trade at NAV and don’t have bid/ask spreads, as well as the ability to schedule automatic monthly investments. ETFs have the advantage of not having any purchase or redemption fees and the ability to be trade in any brokerage account. I went into more detail on the Vanguard mutual fund vs. ETF decision process here.
Vanguard even has a cost comparison tool for mutual funds vs. ETFs. But long-term expenses for me are no longer a concern because they are almost identical with all these Admiral shares. (I suspect the Small Cap Value differential is only temporary.) Here’s the list:
| Funds In My Personal Portfolio | ETF expense ratio |
Admiral Shares expense ratio (est) |
|---|---|---|
| Vanguard Total Stock Market Index Fund | 0.07% | 0.07% |
| Vanguard Small-Cap Value Index Fund | 0.23% | 0.21% |
| Vanguard Total International Stock Index Fund | 0.20% | 0.20% |
| Vanguard Emerging Markets Stock Index Fund | 0.22% | 0.22% |
| Vanguard REIT Index Fund | 0.12% | 0.12% |
I wrote previously about why I invest in the Vanguard Total US and Total International market funds. Want to convert your Investor shares to Admiral shares before they are automatically converted eventually? It just takes a clicks online – here’s a quick guide [pdf]. Want to convert your mutual funds to ETFs? Check out this post on Vanguard mutual fund to ETF share conversions. It turns out you can also do so easily with minimal tax implications.
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I thought that you automatically get the admiral shares once you’ve surpassed minimum balances. You don’t need to do any manual conversions.
Great news, thanks for sharing. The .5% buy-in fee for the Emerging Markets Mutual Fund is unfortunate, as is the annual fee charged for Vanguard brokerage accounts. Personally, I find Schwab’s Emerging Markets ETF a better product for that portion of my portfolio (lower current expense ratio, too).
Thanks Jason. I did not realize Vanguard charged a $20 annual fee for their brokerage account. It looks like I can get it waived when I reach Voyager status. ($50,000 total assets)
The annual account fee is also waived with online statements. Just print them out yourself or save the PDFs (+backup).
Update: that’s for mutual fund accounts. looks like for brokerage account you need to reach Voyager ($50k+ in total assets funds + ETFs).
That’s what I thought too Jonathan, but I can’t find evidence of that. I know that is the case for the mutual fund side but what about the brokerage?
@chedv – You’re right, I was mistaken about the brokerage account. Looks like there is a $20 fee unless you are Voyager or above.
Well I had one on Jonathan! (I mean this good-naturedly, of course.) Obviously $20 is worth it at a certain level of assets considering Vanguard’s excellent brokerage products but I can get the asset mix I need from their funds and I just avoid their relatively weak product (emerging market) from another source. Note that the Schwab uses a slightly different index but considering the short-history of all the emerging market indeces that element is a dice-roll to me.
What are the tax consequences of switching back and forth b/w a mutual fund and its corresponding ETF?
I started with ETF’s since the expense ratios were lower. But once I’ve got more than $10,000, I’d like to switch to the corresponding admiral shares.
Are there any advantages between opening an account at vanguard or buying the ETFs through something like Zecco?