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Rating:Vanguard Discounts Fund Supermarket Trades Not Rated 4.0 Email Routing List Email & Route  Print Print
Monday, December 02, 2002

Vanguard Discounts Fund Supermarket Trades

by: Sean Hanna, Editor in Chief

Vanguard has tweaked the fee schedule for its FundAccess funds supermarket in ways that may increase trading of non-Vanguard funds through the platform. The Valley Forge, Pennsylvania-based firm is dropping both the holding period required for no-transaction fee trades and the minimum investment needed. The fund supermarket carries some 2,600 no-load mutual funds.

Vanguard is slicing the minimum initial investment required for no-transaction-fee funds to $3,000 from $5,000. It is also cutting the period that fund investors must hold funds in the program to avoid a redemption fee to six months from one year previously. In addition, the redemption fee of one percent of assets will be capped at $250. That would effectively eliminate the redemption fee on trades worth more than $25,000.

Both the redemption fee and the required holding period were designed to discourage fund investors from trying to trade the market through funds. By shortening the holding period requirement and capping the redemption fee, both larger account holders and financial advisors using Vanguard will face lowered hurdles to trading in and out of funds.

Although Vanguard's fund supermarket is a relatively young four years old, it has made significant progress with cost-conscious individual investors.  

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