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Rating:Vanguard Scraps Investment Minimums for its Signal Shares Not Rated 5.0 Email Routing List Email & Route  Print Print
Tuesday, November 23, 2010

Vanguard Scraps Investment Minimums for its Signal Shares

by: Hung Tran

Fundsters looking for some early Black Friday value bets may want to check out today's Wall Street Journal Fund Track article.

Vanguard [see profile] is throwing down the gauntlet to its competitors by eliminating the $1 million to $5 million investment minimum on the low-cost Signal Shares of its index funds, the Valley Forge-based company said on Monday.

Vanguard Signal Shares are offered on 25 of its index funds, which include stock and bond funds with expense ratios as low as 0.07 percent.

Vanguard's move was also picked up by WSJ sister publication Barron's.

Meanwhile, the Tuesday edition of the WSJ Fund Track also carried an item on Jason Weiner, who runs three funds for M&I Investment Management Corp [see profile].

Weiner's largest fund, the $369 million Marshall Aggregate Bond Fund, is up 8.74 percent year-to-date, outpacing the 7.51 percent return of its benchmark, the Barclays Capital U.S. Aggregate bond index, according to Morningstar.

Weiner told the WSJ that the fund derives value by migrating through different sectors. "If we see value, we rotate. If we see relative value in Treasurys, we would increase that up to 50 percent of our holdings," he said.


Vanguard reduces costs, eliminates Signal® Share minimums

Vanguard continued its campaign to reduce costs for mutual fund investors today by making its low-cost Signal Shares more accessible to financial intermediaries, advisors, and select institutional clients, including investment-only defined contribution plans, defined benefit plans, endowments, and foundations.

Effective immediately, Vanguard is eliminating the investment minimum to qualify for Signal Shares, which previously required $1 million to $5 million in assets depending on the client and account type.

Vanguard offers Signal Shares for 25 of its index funds, providing investors access to some of Vanguard's largest passively managed equity and bond funds with expense ratios as low as 0.07%.

"Vanguard is continually seeking to bring greater value to our investors—whether they invest directly, with a financial advisor, or through an employer-sponsored retirement plan," said Vanguard CEO Bill McNabb. "Low expense ratios are the tangible benefit of investing with a client-owned company."

A spectrum of low cost share classes

Vanguard offers a spectrum of share classes for many of its funds to meet the needs of a variety of investors, including: Investor Shares, Admiral™ Shares, Signal Shares, ETF Shares, Institutional Shares, and Institutional Plus Shares. The accompanying table shows several of Vanguard's largest index funds with their accompanying share classes and expense ratios.

In the last three months, Vanguard has unveiled low-cost ETFs based on S&P and Russell benchmarks for advisors, lowered the threshold to qualify for its ultra-low-cost Admiral Shares for individual investors, and announced plans to offer Institutional Plus Shares for nine index funds for institutional clients.

"As long as the economics permit, Vanguard will continue to seek to lower the cost of investing," said Mr. McNabb  

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