Vanguard expands low-cost share class to 6 funds

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VALLEY FORGE, Pa. (AP) — Many investors in six Vanguard index mutual funds will be charged lower investment fees after the fund company on Tuesday added a lower-cost share class option for investing in the funds.

With the addition of Vanguard’s Admiral share class to the six funds, investors with at least $10,000 invested will pay expenses ranging from 38 percent less to 51 percent less than they did previously through the funds’ Investor share class.

At $3,000, the account balance minimum for Investor shares is lower than for Admiral shares. The Admiral shares charge lower expense ratios — the ongoing charge for operating the fund, expressed as a percentage of assets.

The Admiral shares are newly available for four domestic stock index funds — Mid-Cap Growth Index, Mid-Cap Value Index, Small-Cap Growth Index, and Small-Cap Value Index — and two international stock index funds, Developed Markets Index and FTSE All World Ex-US Index.

Expense ratios for Admiral shares of the domestic funds range from 0.10 percent to 0.21 percent, compared with 0.26 percent to 0.37 percent for those funds’ Investor shares.

Expenses for Admiral shares of the two international funds are 0.12 percent for Development Markets Index and 0.18 percent for FTSE All World Ex-US Index, compared with 0.22 percent and 0.35 percent for those funds’ Investor shares.

Vanguard said it will automatically convert qualifying Investor shares — those that meet the $10,000 balance requirement for Admiral shares — into the lower-cost shares of the same fund over the next several months. Clients may also convert shares on the company’s website.

The six funds hold nearly $42 billion in total assets. The biggest is FTSE All-World ex-US Index, with $12.8 billion.

Vanguard, a privately held, shareholder-owned company based in Valley Forge, Pa., now has 74 funds that offer Admiral shares. Those include 38 index funds, which seek to keep investor costs low by passively tracking stock indexes, rather than relying on professional managers to pick investments.

Vanguard previously required balances of at least $100,000 for investors in Admiral shares, but lowered the requirement to $10,000 last October in a move that Vanguard said would reduce fees for about 2 million of its individual customers.

Vanguard is the largest U.S. fund company, managing more than $1.6 trillion in U.S. fund assets, including more than 170 funds available to U.S. investors.